Onwards and upwards – PMI

14 Aug 2020

58.8

July

+2.6

Monthly Change

expanding

faster rate

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Catherine Beard

Executive Director, ExportNZ & ManufacturingNZ

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New Zealand's manufacturing sector showed further expansion in July, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for July was 58.8 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was up 2.6 points from June, and now the highest result since April 2018.

BusinessNZ's executive director for manufacturing Catherine Beard said that in a similar vein to the last month, the path towards recovery continues for many manufacturers through increased orders and production in full swing.

"This is obviously a welcome outcome given the halt in any activity for many over lockdown. However, we should be careful not to interpret this as a new dawn for the sector, rather a catch-up for many trying to get back to a new sense of normality."

"While the key indices of new orders (67.4) and production (61.4) showed further expansion, employment (46.5) remained weak and in contraction for the fifth consecutive month."

BNZ Senior Economist, Doug Steel said that “July’s PMI had firmly set up the idea that manufacturing GDP would bounce back strongly in Q3 after what was surely a very large decline in Q2. The latest virus outbreak calls that into question and adds to the reservations that we already had for growth in Q4."

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Main Indicies

Regional Results

Manufacturing Landscape
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Doug Steel

Senior Economist, BNZ

Recovering Pre-Outbreak

July was another month of recovery for the manufacturing sector. Indeed, it was a strong one judging by the Performance of Manufacturing Index (PMI). It lifted to 58.8, building on June’s already positive 56.2. These positive readings follow extreme weakness through April (26.0) and May (40.3).
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Higher Orders, Flat Inventory

July’s PMI new orders reading of 67.4 was the strongest since June 2004 and the second strongest in the survey’s history. Yes, there is a fair degree of rebound still coming through in this indicator from previous lockdown-induced weakness so it likely overstates the underlying strength, but there is no denying that new orders picked up strongly in the month.
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Lower Employment

It is notable that even before the latest virus outbreak, the July PMI indicates that manufacturers were reducing staff numbers.
Read more

View full BNZ Manufacturing Snapshot

PMI Time Series Table

The results are seasonally adjusted.

National IndiciesJul
2019
Mar
2020
Apr
2020
May
2020
Jun
2020
Jul
2020
BNZ - BusinessNZ PMI 48.237.826.040.356.258.8
Production50.631.318.839.158.461.4
Employment 42.145.241.039.248.546.5
New Orders49.037.216.740.658.267.4
Finished Stocks52.044.837.741.157.151.6
Deliveries48.839.225.341.957.658.2

View the Time Series Data

BNZ - BusinessNZ PMI Time Series

July 2016 – July 2020

PMI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PMITM
3 Aug 2020

50.3

International PMI