New Zealand’s manufacturing sector slipped further into contraction territory in June, dragged by lower rates in production and new orders.
The latest BusinessNZ Performance of Manufacturing Index (PMI) posted a 47.5 rating, indicating declining conditions in the industry in June. The result marks the lowest level of activity since November 2022 and well below the long-term average activity rate of 53.0.
The industry continued to struggle in June declining faster from May’s 48.7 result.
The Quarterly Survey of Business Opinion showed patchiness among its manufacturing cohort, according to BNZ’s manufacturing snapshot report.
The QSBO corroborated the weakness in the new orders index of the PMI. The QSBO pointed to manufacturing output decreasing markedly over the coming months.
Meanwhile, there was also a negative view in the QSBO regarding recent staffing levels, which was mirrored in the PMI’s employment index as it declined to 47.0 in June, from May’s 49.3.
BusinessNZ’s Director for Advocacy Catherine Beard said the NZ manufacturing sector remains entrenched in contraction, with eight of the last 10 months showing overall activity below the 50.0 point mark.
The further drop in activity resulted in the rise of negative comments increasing to 74.5 per cent in June, compared with 66.7 per cent in May and 70.3 per cent in April.
Manufacturers saw declining demand, cost increases/inflation and production/staffing issues as the key influences on activity for the current month.
“For a weaker reading, one has to go back to August 2021 (39.0), when the Delta strain outbreak of COVID-19 invoked level-4 lockdowns,” said Craig Ebert, senior economist at BNZ.
