New Zealand’s manufacturing sector experienced contraction for the last month of 2020, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for December was 48.7 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was down 6.0 points from November, and the lowest level of activity since May.
BusinessNZ’s executive director for manufacturing Catherine Beard said that after six consecutive months in expansion, the December result was a disappointing way to end the year.
“While production (51.5) managed to keep its head above water, the other key sub-index of new orders (49.9) failed to record expansion. Employment (49.9) also fell just below the 50.0 point mark, while finished stocks (45.9) and deliveries (44.5) both fell well into contraction.”
“Interestingly, the December value was the same as the overall average result of 48.7 for 2020. While seven of the twelve months saw expansion in the sector, the effects of COVID-19 and the subsequent lock-down saw a dramatic fall in activity during the first half of 2020 that brought the overall average down.”
BNZ Senior Economist, Doug Steel said that “the PMI’s three-month moving average sits at an expansionary 51.8, albeit below its long-term average of 53.0. This all suggests some expansion in the final quarter of last year, but the softer December month suggests some caution heading into the New Year.”
