Rock bottom – PMI

15 May 2020

26.1

April

-11.9

Monthly Change

contracting

faster rate

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Catherine Beard

Executive Director, ExportNZ & ManufacturingNZ

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New Zealand's manufacturing sector fell to its lowest level of activity since the survey began, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for April was 26.1 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  This was down 11.9 points from March*.  The previous low point had been 36.1 in November 2008, which was due to the Global Financial Crisis.

BusinessNZ's executive director for manufacturing Catherine Beard said that given part of March and almost all of April was in complete lockdown for the country, a significant fall in manufacturing activity was fully expected.  The key sub-indices of Production (19.8) and New Orders (17.8) were particularly hit hard. 

"Looking at comments from respondents, only two words stand out, namely COVID-19 and lockdown, with 89.7% of respondents outlining negative comments".   

"With level 3 in place since 28 April, along with the country entering level 2 on 14 May, a greater sense of normality will hopefully be present for most manufacturers during the second half of May.  This should see a return to relatively stronger levels of activity.  However, to what extent the sector climbs out of rock bottom will largely depend on the ability to get new orders up and running, along with revised factory floor processes for production".  

BNZ Senior Economist, Doug Steel said that “recent negative PMI readings from around the world illustrate the widespread economic pain being felt. New Zealand’s April reading is lower than other countries we often compare ourselves to, which tallies with suggestions that NZ restrictions have been tighter than many”.

*Due to not running the March 2020 PMI because of COVID-19, the March figures have been obtained by taking an average of both the actual combined February 2020 and April 2020 values.  The results have then been seasonally adjusted.

View the Time Series Data


Main Indicies

Regional Results

Manufacturing Landscape
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Doug Steel

Senior Economist, BNZ

Shutdown

April’s Performance of Manufacturing Index (PMI) was never going to be anything but awful. And so it is. With various lockdown rules in place through the month, the seasonally adjusted index fell to its lowest ever level at 26.1.
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Employment Supported

New orders recorded the weakest result of all sub components, with a previously-unthinkable reading of 17.8. Production was similarly feeble at 19.8. These are simply dreadful readings representing a sudden stop across much of the manufacturing sector. Needless to say, they are miles below normal.
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Disorder

Looking at prior relationships, a slump in new orders of the degree seen in April would be consistent with core manufacturing sales dropping by about a third. But we’d caution against drawing any precise conclusions when such extreme movements take place.
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Global Pain

Recent negative PMI readings from around the world illustrate the widespread economic pain being felt. NZ’s April reading is lower than other countries we often compare ourselves to, which tallies with suggestions that NZ restrictions have been tighter than many.
Read more

View full BNZ Manufacturing Snapshot

PMI Time Series Table

The results are seasonally adjusted.

National IndiciesApr
2019
Dec
2019
Jan
2020
Feb
2020
Mar
2020
Apr
2020
BNZ - BusinessNZ PMI 53.148.748.753.738.026.1
Production51.447.848.854.531.419.8
Employment 51.749.546.751.144.941.2
New Orders53.349.949.256.136.617.8
Finished Stocks53.052.050.252.744.638.0
Deliveries57.749.146.752.938.525.8

View the Time Series Data

BNZ - BusinessNZ PMI Time Series

July 2016 – April 2020

PMI Time Series Graph

International Results

J.P. Morgan Global Manufacturing PMITM
4 May 2020

39.8

International PMI