The latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI) has revealed a positive shift in New Zealand’s manufacturing sector during November, signalling a break from the recent trend of decline.
However, the sector still grapples with contraction, marking the ninth consecutive month below the crucial 50.0 threshold.
The seasonally adjusted PMI for November registered at 46.7, a notable increase from October’s 42.9, marking the highest activity level since June.
According to BusinessNZ, while the uptick is encouraging, it underscores the persistent challenges faced by the manufacturing sector.
Catherine Beard, director of Advocacy at BusinessNZ, acknowledged the improvement but emphasised the need for sustained efforts to propel the sector into expansion.
“The key sub index measure of Production (43.6) remains stubbornly low, while New Orders (47.7) showed some improvement compared to previous months. Employment (47.9) also showed a relative improvement, while Finished Stocks (50.7) managed to revert back to expansion after a dip in October,” stated Beard.
The proportion of negative comments decreased from 65.1 per cent in October to 58.7 per cent in November, with many manufacturers citing a general lack of demand and sales as the predominant challenge.
BNZ Senior Economist Craig Ebert highlighted the significance of the PMI’s production index, which, while showing improvement in November, remained nearly 10 index points below its long-term average.
Ebert noted, “That’s a big undershoot, in historical context.”
Furthermore, the Q3 GDP report further emphasized a substantial pullback in manufacturing production, experiencing a quarterly drop of 3.4 per cent.
This decline aligns with the persistently weak signals from the PMI’s production index, indicating ongoing challenges for the manufacturing sector.
November’s PMI results suggest that manufacturing production will continue to face difficulties in Q4 GDP.
While the uptrend in the PMI offers a glimmer of hope, industry experts stress the importance of sustained efforts, increased demand, and strategic measures to steer the manufacturing sector towards recovery and expansion.
For more detailed insights into the BNZ – BusinessNZ PMI, visit BusinessNZ’s official website.
