Activity in New Zealand’s manufacturing sector dropped to its third lowest value for a non-COVID lockdown month, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for June was 41.1 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was down from 46.6 in May, and significantly below the long term average of 52.6. It was the lowest non-COVID lockdown monthly level of activity since February 2009.
BusinessNZ’s Director, Advocacy Catherine Beard said that the freefall in activity from May to June was a major concern for a sector that had already been stuck in contraction for the past 15 months.
“The key sub-index results for Production (35.4) and New Orders (38.8) both posted sub-40 activity levels, which were the lowest for a non-COVID lockdown month since November 2008. Employment (43.8) dropped back to its lowest non-COVID monthly result since July 2019, while Deliveries (44.9) remained unchanged from May”.
Given the swift drop in activity for June, the proportion of negative comments stood at 76.3%, which was up from 63.5% in May and 69% in April. Negative comments focused heavily on an overall slowdown and tough recessionary times.
BNZ’s Head of Research Stephen Toplis said that “while the weakness in these series have not been as deep as during the GFC the length of it has been longer, and it is not over yet. Manufacturing activity is highly leveraged to domestic demand, particularly residential construction and household spending. Both of these are faltering”.
