Contraction – PMI

16 Aug 2019




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Catherine Beard

Executive Director, ExportNZ & ManufacturingNZ

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New Zealand's manufacturing sector fell into contraction for the first time since 2012, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for July was 48.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  This was 2.9 points down from June, and the lowest overall result since August 2012.

BusinessNZ's executive director for manufacturing Catherine Beard said that concerns around the direction of activity over the last six months has inevitably led to the sector falling into decline. 

"While the key sub-index of production (51.1) kept its head above water with a result matching the previous month,  the other key sub-index of new orders (48.9) fell 3.5 points to its lowest result since December 2012.  Worst still, employment (42.6) experienced its third consecutive decline to reach its lowest value since June 2009.  

The proportion of positive comments for July (44.0%) remained the lesser of the two options, although not quite as bad as June (42.9%).  A lack of orders and customer demand dominated the negative comments received, along with a general softening of markets.

BNZ Senior Economist, Craig Ebert said that “while July’s result is no dead-set that the economy at large is contracting, the shrinkage is certainly something to take note of”.

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Main Indicies

Regional Results

Manufacturing Landscape
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Craig Ebert

Senior Economist, BNZ


For the first time in 82 months, New Zealand’s Performance of Manufacturing Index (PMI) has dipped into contractionary territory. Then again, its seasonally adjusted reading of 48.2 for July was no great surprise, given the sector’s adverse inventory dynamics we noted over recent months.
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The worry around the latest NZ PMI is compounded by its detail. Notably, new orders weakened a lot. This sub-index dropped to a seasonally adjusted 48.9 in July, from 52.4 in June (the long-term average being 55.1).
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It wasn’t as if manufacturing output itself was falling. Indeed, the PMI index on production kept its head above water in July, with a steady, albeit slow, 51.1. However, there was definitely something coming unstuck with respect to hiring.
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Interestingly, these signals of weakness in manufacturing jobs have not coincided with dissipating wage inflation in the industry. In fact, the opposite is occurring.
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View full BNZ Manufacturing Snapshot

PMI Time Series Table

The results are seasonally adjusted.

National IndiciesJul
BNZ - BusinessNZ PMI 51.951.752.750.351.148.2
Employment 51.951.951.448.347.242.6
New Orders53.552.752.350.552.448.9
Finished Stocks54.253.052.556.657.353.2

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BNZ - BusinessNZ PMI Time Series

July 2016 – July 2019

PMI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PMITM
1 Aug 2019


International PMI