New Zealand’s manufacturing sector slipped further into contraction during September, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for September was 45.3 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was down from 46.1 in August, and the lowest level of activity for a non-COVID affected month since May 2009. The September result is also significantly below the long-term average activity rate of 52.9.
BusinessNZ’s Director, Advocacy Catherine Beard said that the September result continued an entrenched downward trend in activity over the last four months.
“The manufacturing sector has now been in contraction for seven consecutive months, with little sign it is showing any improvement. The key sub index measures of Production (44.6) and New Orders (44.9) show weak activity, while Employment (45.2) and Deliveries (44.3) both fell from August.”
The proportion of negative comments stood at 68.8%, which was up slightly from 66.7% in August, but down from 72% in July. Manufacturers continued to note declining sales, General Election uncertainty and ongoing rising costs as the key negative influences on activity for September.
BNZ Senior Economist, Doug Steel stated that “the trend remains firmly downward. It is a poor signal for the likes of manufacturing GDP growth. It is always difficult to know the precise drivers of any particular PMI result but judging by respondent comments falling sales, rising costs, and election uncertainty are currently all part of the mix”.