New Zealand’s manufacturing sector remained in contraction for the second consecutive month, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for August was 48.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was 0.3 points up from July, the last time the sector experienced a decline for two months in a row was 2012.
BusinessNZ’s executive director for manufacturing Catherine Beard said when the headline result is broken down into the key sub-index values, a few concerns stand out.
“The sub-index of new orders (45.6) dived further into decline during August, and at its lowest point in over ten years (May 2009). Given production (49.7) fell from expansion in July to decline in August, further declines in new orders will typically lead to worsening of production levels in the months ahead.
“While employment (49.3) showed some recovery from July, it has remained in contraction for four consecutive months. Deliveries of raw materials (48.0) also remained in a tight band of contraction between 48-0-48.9 for three consecutive months.
The proportion of positive comments for August (47.4%) improved from July (44.0%), although a number of businesses outlined the general weakening of orders due to an overall economic downturn.
BNZ Senior Economist, Doug Steel said that “disconcertingly, the PMI adds to a building case over recent times that there has been a palpable softening in demand – at least for manufactured goods”.
