The manufacturing sector in New Zealand saw a deeper slide into contraction during September with the seasonally adjusted PMI valued at 45.3, according to the latest BusinessNZ Performance of Manufacturing Index (PMI).
In the PMI system, a reading above 50.0 indicates expansion, while a reading below 50.0 suggests contraction.
The September figure was a decline from the August reading of 46.1, marking the lowest level of activity for a non-COVID-affected month since May 2009.
Additionally, the September result was significantly below the long-term average activity rate of 52.9.
Catherine Beard, director of Advocacy at BusinessNZ, expressed her concern about the continued downward trend in activity over the past four months.
“The manufacturing sector has now been in contraction for seven consecutive months, with little sign it is showing any improvement. The key sub index measures of Production (44.6) and New Orders (44.9) show weak activity, while Employment (45.2) and Deliveries (44.3) both fell from August,” Beard said.
The majority of negative comments from manufacturers reached 68.8 per cent, a slight increase from 66.7 per cent in August but lower than the 72 per cent in July.
Manufacturers continued to cite declining sales, uncertainties stemming from the General Election, and ongoing rising costs as the key negative factors affecting activity in September.
BNZ Senior Economist Doug Steel pointed out that the persistent downward trend strongly indicates unfavourable prospects for the growth of manufacturing GDP.
“It is always difficult to know the precise drivers of any particular PMI result but judging by respondent comments falling sales, rising costs, and election uncertainty are currently all part of the mix,” Steel noted.
