Activity in New Zealand’s manufacturing sector improved in January, but still remained in contraction, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for January was 47.3 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was up from 43.4 in December and the highest level of activity since June 2023. However, the sector has now been in contraction for eleven consecutive months.
BusinessNZ’s Director, Advocacy Catherine Beard said that the January result was a step in the right direction to get the sector out of a prolonged period of contraction, but further work remains.
“On the positive side, Employment (51.3) was in slight expansion for the first time since February 2023, while New Orders (47.7) improved to its highest level since May 2023. However, New Orders has now remained in contraction for eight consecutive months, which combined with Production (42.1) has meant a sector that is still someway off returning to expansion”.
The proportion of negative comments in January stood at 63.2%, which was up from 61% in December and 58.7% in November. Seasonal factors such as holidays was noted by many, as well as a lack of demand/orders.
BNZ Senior Economist Doug Steel, stated that “across components, employment stood out like the proverbial with a poke back above 50. This is at odds with deeply negative production and demand indicators like new orders. The whiff of more employment in the PMI might reflect better access to staff, with manufacturers reporting in the latest QSBO that labour is easier to find”.
