New Zealand’s manufacturing sector displayed contraction for a third consecutive month, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for September was 48.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was also the same level of contraction as August.
BusinessNZ’s executive director for manufacturing Catherine Beard said that the September result showed both positive and negative signals.
“The sub-index of new orders (50.1) recovered from its decline in August to just keep its head above water for September. Also, employment (50.0) showed no change following four consecutive monthly declines. However, the weak new order results in recent months meant production (46.2) fell to its lowest result since April 2012. In addition, deliveries of raw materials (46.4) fell to its lowest since March 2011.
“Overall, while it is good to see the sector not declining further, it remains stuck in a tight band of contraction. The key to lifting it back into expansion will be a sustained boost to both new orders and production in the months ahead.
The proportion of positive comments for September (48.8%) again improved from the previous month, although a number of businesses who outlined positive influences still regard the current climate as a mixed bag.
BNZ Senior Economist, Doug Steel said that “the October PMI is hardly what you would call strong. But it is certainly much better than the previous three months where the index languished below 50 which indicated a sector going backwards”.