Solid start to year – PMI

12 Feb 2021

57.5

January

+9.2

Monthly Change

expanding

previously contracting

New Zealand's manufacturing sector started the year with expansion, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 57.5 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was up 9.2 points from December, and a solid return to expansion.

BusinessNZ's executive director for manufacturing Catherine Beard said that the January result was a welcome start to 2021, with the result clearly above the long term average of 53.0 for the Index.

"All major sub-index values were up from December, with New Orders (62.4) leading the way with its highest result since July last year. Production (59.1) rose 6.8 points, while Employment (55.4) produced its highest result since August 2017."

BNZ Senior Economist, Craig Ebert said that “the 3-month average to January was 53.6, slightly above the long-term norm of 53.0. Also, January’s improvement was encouraging in its composition, with New Orders leading the way"

View the Time Series Data

Main Indicies

Regional Results

PMI

The Performance of Manufacturing Index (PMI) roared back to positivity in January, with an index reading of 57.5. This was a far cry from the 48.3 it stumbled to in December. The 3-month average to January was 53.6, slightly above the long -term norm (53.0).
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Seasonality

This variety of movement and levels in the sub -components argues against the notion that the big down and up in the overall PMI over December 2020 and January 2021 might reflect difficulties in the seasonal adjustment method in dealing with (i) the stop-start episodes we’ve seen on account of COVID-19 and (ii) the fact that as there was no survey conducted for March 2020, with that month’s numbers made to be the average of the February and April results.
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Sub detail

The other reason to trust the down and up in the seasonally adjusted PMI over December and January is simply that the unadjusted (raw) series echoed a similar thing, when compared to respective year-ago levels.
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Global

Of course, it’s good to see New Zealand’s PMI bounced so much in January, to such a strong level. However, we need to be careful about presuming it must therefore be doing far better than PMI’s globally are at present.
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View full BNZ Manufacturing Snapshot