New Zealand’s manufacturing sector continued to lose momentum in August, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for August was 46.1 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was down from 46.6 in July, and the lowest level of activity for a non-COVID affected month since June 2009. The August result is also well below the long-term average activity rate of 52.9.
BusinessNZ’s Director, Advocacy Catherine Beard said that the August result told the tale of another tough month for the sector.
“While the key sub-index components of New Orders (46.6) and Production (43.9) improved slightly from July, the trend since March has seen them all but entrenched in contraction. 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.”
The proportion of negative comments stood at 66.7%, which was down slightly from 72% in July, but identical to May (66.7%). Manufacturers continued to note general market uncertainty (both domestic and offshore), rising costs, and weather affecting demand as the key negative influences on activity for August.
BNZ Senior Economist, Craig Ebert stated that “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”.
