That sinking feeling – PMI

13 Sep 2019




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Catherine Beard

Director, Advocacy BusinessNZ

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New Zealand's manufacturing sector remained in contraction for the second consecutive month, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for August was 48.4 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  While this was 0.3 points up from July, the last time the sector experienced a decline for two months in a row was 2012.

BusinessNZ's executive director for manufacturing Catherine Beard said when the headline result is broken down into the key sub-index values, a few concerns stand out. 

"The sub-index of new orders (45.6) dived further into decline during August, and at its lowest point in over ten years (May 2009).  Given production (49.7) fell from expansion in July to decline in August, further declines in new orders will typically lead to worsening of production levels in the months ahead.

"While employment (49.3) showed some recovery from July, it has remained in contraction for four consecutive months.  Deliveries of raw materials (48.0) also remained in a tight band of contraction between 48-0-48.9 for three consecutive months.  

The proportion of positive comments for August (47.4%) improved from July (44.0%), although a number of businesses outlined the general weakening of orders due to an overall economic downturn.

BNZ Senior Economist, Doug Steel said that “disconcertingly, the PMI adds to a building case over recent times that there has been a palpable softening in demand – at least for manufactured goods”.

View the Time Series Data

Main Indicies

Regional Results

Manufacturing Landscape
View Doug Steel's profile

Doug Steel

Senior Economist, BNZ

Under Pressure

Back in July, the Performance of Manufacturing Index (PMI) dipped into contractionary territory for the first time in 82 months. There was no reprieve in August.
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Lower Order

The details only add to the sense of retreat. Production contracted in August, as new orders have collapsed over the past couple of months. From a below normal 52.2 in June, new orders slumped to 48.5 in July, before falling further to 45.6 in August.
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Pulling Back

In line with weak activity indicators, PMI employment was in negative territory for the fourth consecutive month in August.  Yes the employment index bounced to 49.3 from a truly dismal level of 42.3 it plumbed in July, but it remains contractionary.
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GDP Implications

We think manufacturing will be a drag on NZ’s Q2 GDP figures when they are released next Thursday. And the PMI through July and August suggests the sector will also struggle to make a positive contribution to growth in Q3.
Read more

View full BNZ Manufacturing Snapshot

PMI Time Series Table

The results are seasonally adjusted.

National IndiciesAug
BNZ - BusinessNZ PMI 52.452.750.
Employment 48.551.548.647.742.349.3
New Orders54.252.350.452.248.545.6
Finished Stocks52.252.156.457.253.153.0

View the Time Series Data

BNZ - BusinessNZ PMI Time Series

January 2018 – August 2019

PMI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PMITM
3 Sep 2019


International PMI