Sticky Gear – PMI

11 Feb 2022

52.1

January

-1.7

Monthly Change

expanding

slower rate

New Zealand's manufacturing sector saw a reduction in the level of expansion for the first month of 2022, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 52.1 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 1.7 points lower than December, and below the long-term average of 53.1 for the survey.

BusinessNZ's Director, Advocacy Catherine Beard said that despite the PMI being in expansion since September, it has struggled to gain any real expansionary momentum. The constantly changing COVID-19 related rules and sanctions are obviously a key inhibiter for certainty and planning, which will likely continue for some time yet given the expected wide spread of Omicron in New Zealand.

"In terms of the main sub-indices, Production (51.2) and New Orders (53.3) both fell back from healthy levels of expansion in December, while Employment (49.2) fell back into contraction. These lower activity levels also saw the proportion of negative comments increasing from 49.5% in December to 63.1% in January."

BNZ Senior Economist, Doug Steel stated that, “January’s PMI results feel like something of a placeholder before Omicron hits proper over coming months along with anticipated higher rates of absenteeism and disruption."

View the Time Series Data

Main Indicies

Regional Results

PMI

The Performance of Manufacturing Index (PMI) has continued its recent sequence of oscillating around its long-term average. January’s 52.1 reading was a bit under the long-term norm of 53.1, after December’s somewhat perkier 53.8.
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Questions

But the details do raise some questions about what is going on beneath the surface. The production index eased to a slow looking 51.2 in January. Maybe this is just some ‘payback’ from December’s very strong 56.2.
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Is demand slowing?

The PMI new orders index fell to 53.3 from December’s 57.1. This is not that far below the long-term norm of 55.0, but it is the lowest reading since the lockdown back in August. It makes one wonder if demand has slowed into the New Year.
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What next?

In any case, it has to be said, January’s PMI results feel like something of a place holder before Omicron hits proper over coming months along with anticipated higher rates of absenteeism and disruption.
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View full BNZ Manufacturing Snapshot