New Zealand’s manufacturing sector contracted in March and remains well below the long-term average signalling challenges for the sector, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
A closer look at the data reveals that NZ’s seasonally adjusted PMI fell to 48.1 in March from 51.7 in February – a 3.6-point drop and below the long-term average activity rate of 53.0.
A reading above 50 indicates manufacturing activity is expanding, while anything below that threshold points to contraction, according to BusinessNZ.
Catherine Beard, BusinessNZ’s Director of Advocacy, pointed out that the numbers behind the main March result indicate the manufacturing sector is facing significant headwinds.
Looking at the key sub-index values, Beard revealed that production dropped from 48.7 to 43.3, its lowest level since the last nationwide lockdown in August 2021.
Meanwhile, new orders fell to 46.7, down from 51.5 in the prior month.
Employment shrank from 55.2 to 47.1, while new orders dipped from 51.5 to 46.7, matching November 2022 levels.
Finished stocks decreased from 55.1 to 48.4, and deliveries rose slightly from 52.2 to 53.8, its third consecutive lift in expansion.
Due to the decrease in activity in March, the percentage of critical comments increased to 63.2 per cent from 60.2 per cent in February and 69.9 per cent in January.
A general slowdown and a drop in demand were common themes in the comments.
BNZ senior economist Craig Ebert said that as disappointing as the March PMI was, it was not especially negative in the longer-term context.
“Neither was it much out of line with manufacturing readings across the world of late,” Ebert said.
