New Zealand’s manufacturing industry continues to slip further into contraction in August, with the BusinessNZ Performance of Manufacturing Index (PMI) posting a 46.1 reading, down from July’s 46.6.
The latest result marks the lowest level of activity for a non-COVID-affected month since June 2009. The result is also well below the long-term average activity rate of 52.9.
“While it has been far worse, during past recessions, it also loses points for its latest composition,” BNZ said in the latest Manufacturing Snapshot report.
Inventories prevented a bigger decline in the manufacturing sector’s health, with an above-average result of 52.1
Meanwhile, employment posted a 47.7 rating, which is 2.9 points below normal.
New orders were a full 8.0 points shy of the indicator’s trend at 46.6.
The biggest drag was in production, which stood at 43.9— 9.5 points below par.
August is another tough month for the New Zealand manufacturing sector, according to BusinessNZ Director of Advocacy Catherine Beard.
“While the key sub-index components of New Orders and Production improved slightly from July, the trend since March has seen them all but entrenched in contraction,” Beard said.
“Any movement towards overall expansion in the sector needs to see a sustained lift above 50.0 for both of these key PMI components. Again, only Finished Stocks (52.1) remained in positive territory for August,” she added.
The proportion of negative outlook among business leaders stood at 66.7 per cent, which was down from July’s 72 per cent, but identical to May.
Manufacturers continued to express uncertainty in both domestic and offshore markets, citing rising costs and adverse weather that affects demand as the key negative influences on activity for August.
“While the PMI headline result has been far worse during past recessions, the August result also loses points for its latest composition as New Orders and Production were the biggest drags being 8.0 and 9.5 points below par respectively,” said Craig Ebert, a senior economist at BNZ.
