New Zealand manufacturing contracts further in July— BusinessNZ PMI

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BusinessNZ Performance of Manufacturing Index (PMI) posted a 46.3-point rating in July, indicating further contractionary conditions in the New Zealand manufacturing sector. 

The current reading follows June’s 47.4 rating but marks well below the long-term average activity rate of 52.9 and reflects the lowest level of business activity in the sector since August 2021, when the country was in lockdown. 

BNZ’s Manufacturing Snapshot report said the decline in July has been widespread and pronounced across most of the major categories including production, employment, new orders, and deliveries of raw materials. 

All components in the survey reported scores below the neutral score of 50 and even further back from their respective long-term norms, with the exception of stocks of finished products, which reported a 52.6 rating. 

The new orders index reported a 45.0 rating in July, placing it substantially behind the inventory indicator, which does not bode well for production ahead, the BNZ PMI report said. 

The production index is already at a very low 42.9 and with inventories still building, the accumulating weakness will be one factor behind a soft employment reading in July at 44.3. 

Catherine Beard, BusinessNZ’s director, said the sector’s July result showed very little signs of potential improvements for the sector as a whole. 

Meanwhile, the proportion of negative comments stood at 72 per cent in July, a slightly similar result to that of June, which stood at 74.5 per cent, but up in May (66.7 per cent) and April (70.3 per cent). 

NZ manufacturers cited general market uncertainty, rising costs, and weather-affecting demand as the key negative influences on activity for July. 

BNZ Senior Economist, Doug Steel said “the July result was the fifth consecutive monthly sub-50 reading and, outside of Covid lockdown periods, the lowest reading since the GFC days back in June 2009”.