Finishing on a stronger note – PMI

11 Dec 2020

55.3

November

+2.9

Monthly Change

expanding

faster rate

New Zealand's manufacturing sector experienced a pick-up in expansion during November, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for November was 55.3 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was up 2.9 points from October, and the highest level of expansion since July.

BusinessNZ's executive director for manufacturing Catherine Beard said that the sector has now remained in positive territory for the sixth consecutive month, despite swings in the actual activity levels.

"The key indices of production (55.4) and new orders (57.6) both displayed healthy levels of expansion during November, while employment (51.5) eased back to September levels. Interestingly, finished stocks (59.0) recorded its highest value since the survey began, which may be due to COVID related delayed activity and distribution issues that has plagued 2020."

"Overall, the sector is shaping up to end 2020 on a positive note, which would be a considerable contrast to what was seen during the first half of the year."

BNZ Senior Economist, Doug Steel said that "as a measure of change, the PMI suggests that the manufacturing sector continues to move in the right direction after getting hit hard earlier in the year by COVID related restrictions."

View the Time Series Data

Main Indicies

Regional Results

Positive results

November saw the manufacturing sector take a stride forward. The Performance of Manufacturing Index (PMI) lifted to 55.3 from 52.4 in October. It’s the sixth consecutive monthly reading above the breakeven 50 mark. Moreover, the index is now back above its long-term average of 53.0.
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But

As positive as the headline PMI results look, there are some areas to monitor. One is deliveries of raw materials. While this measure did rise, to 52.2 from 49.6, it was the only subcomponent sitting below its long-term average. This suggests manufacturers continue to face some challenges sourcing inputs to the production process.
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Regional differences

While it is difficult to know the drivers, there were some clear differences across the major regions. While all regions’ PMIs were on the right side of 50 in November, the Central and Canterbury regions’ results stood out in both being well above their normal readings for November.
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GDP thoughts

After working through the detail of this week’s official manufacturing sales and inventory data for Q3, we estimate the sector staged something like a 20% rebound in production after Q2’s huge disruption. We think this will be part of a huge bounce in overall Q3 GDP when the figures are released next week.
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View full BNZ Manufacturing Snapshot