According to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI), New Zealand’s manufacturing sector expanded significantly in June.

The seasonally adjusted PMI for June was 59.7 (where a reading above 50.0 indicates that the manufacturing sector as a whole is expanding, and a reading below 50.0 indicates a contraction). This was sharply up from 51.3 in May and 50.6 in April and sits well above the survey’s long-term average of 52.5.

BusinessNZ’s Director of Advocacy, Catherine Beard said: “It is hugely encouraging to see the PMI jump to 59.7, its strongest reading since July 2021. Just as pleasing is the shift in mood with positive comments outweighing negative ones for the first time in recent months, at 52%. There are still real headwinds with the conflict in the Middle East and high fuel prices continuing to be a factor for many respondents, but this months result reflects a huge positive shift after a long stretch of soft results, which is a very welcome turn.”

The respondent comments showed that, while the conflict in the Middle East and cost-of-living pressures remain an aspect for many, they were outweighed this month by respondents reporting stronger sales, fuller order books and a renewed sense of confidence.

Every sub-index was firmly in expansion. New Orders was the standout, at 64.1, pointing to a healthy forecast of work ahead, while Production surged to 59.4 and Deliveries to 57.3. Stocks of Finished Products (56.9) and Employment (55.8) were also well clear of 50.0, an encouraging sign for manufacturing hiring.

BNZ Head of Research, Stephen Toplis, said “Frankly, we are staggered by the extent the Index has jumped. From a war afflicted seasonally adjusted low of 50.6 in April the index has surged to 59.7 in June to its highest level since July 2021, which was during the COVID economic bounce-back. Exclude this and you need to go back to May 2017 to get a better reading.”