The New Zealand manufacturing industry’s market activity slipped into contraction territory in October, according to a report from Business NZ.
The Bank of New Zealand-Business NZ’s seasonally adjusted Performance of Manufacturing Index (PMI) has plunged by 2.4 points to 49.3 in October, making the lowest level of activity since August 2021 when there was a nationwide COVID-19-related lockdown.
Prior to this latest development, the sector was in seeing a steady expansion in market activity, with a recorded rating of 51.7 per cent in September.
Catherine Beard, BusinessNZ’s director, said the October result for New Zealand mirrors similar results abroad.
“Given the global PMI signalled a second successive monthly contraction to stand at 49.4, it appears New Zealand now has a common thread with many other countries of decreasing production and a drop in demand for new orders,” Beard said in a press release.
Two key sub-index values of production and new orders both contracted in October, with 49.9 and 44.7 ratings, respectively.
The decline in the new orders marks the fifth time the sub-index dipped below 45 since 2009.
Additionally, the employment index saw its lowest level of activity since November 2021, with a 48.9 per cent rating.
Manufacturers have also continued to have a negative mindset, with the proportion of negative comments standing at 61.6 per cent— a steady rating from September’s 61.5 per cent turnout.
A significant number of business leaders in the survey mentioned staff shortages and a fall-off in new orders as factors for the mindset.
“New orders are falling while the PMI stocks index remains expansionary and firmly above its long-term norms. A low orders-to-inventory ratio typically bodes ill for production ahead,” said BNZ Senior Economist Doug Steel.
