New Zealand’s manufacturing sector again remained just below expansion levels for September, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for September was 49.9 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was exactly the same result as August but below the average of 52.4 since the survey began.
BusinessNZ’s Director of Advocacy, Catherine Beard, said that while it was good to see the September result not showing increased contraction from August, the sector remains agonizingly close to returning to expansion mode.
“Despite the sector remaining in technical contraction, four of the five main sub-index values were in expansion during September. This was led by Deliveries of Raw Materials (51.1), followed by Finished Stocks (50.4) and New Orders (50.3). Production (50.1) managed to keep its head above water, but Employment (47.5) was the primary reason for the September PMI result not being able to advance to expansion”.
The proportion of negative comments from respondents stood at 60.2% in September, compared with 58.1% in August and 58.6% in July. Manufacturers continue to report soft demand, with many noting lower order volumes, cautious customer spending, and ongoing uncertainty across domestic and export markets. Rising costs, weak confidence, and competitive pressures are squeezing margins, leaving many manufacturers in a holding pattern as they wait for clearer signs of recovery.
BNZ’s Senior Economist Doug Steel said that “the lack of improvement in the PMI risks a slower recovery than we have penciled in. Improvement is needed to be consistent with the pace of growth we forecast for the second half of this year”.
