New Zealand’s manufacturing sector continued to show contraction during June, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for June was 48.8 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). While this was up from 47.4 in May, it was not enough to see the sector climb out of contraction. The survey was also well below the average of 52.5 since it began.
BusinessNZ’s Director, Advocacy Catherine Beard said that the positive start to the year is now being undone somewhat by manufacturers that are currently struggling to see expansion in most elements of their business.
“Four of the five main sub-index values were in decline. New Orders (51.2) improved the most from May to June to show some optimism for the months ahead, while Production (48.6) inched closer to the no-change mark of 50. However, Finished Stocks (46.9) dipped to its lowest value since December 2024 after five consecutive months of expansion, while Employment (47.9) remains in contraction after a sizeable drop in activity the month before.”
The proportion of negative comments from respondents for June (65.5%) was almost identical to May (64.5%). Comments indicate that manufacturers report a major slowdown due to weak consumer demand, high living costs, and economic uncertainty. Falling construction activity, rising input costs, and global instability are reducing orders and cashflow, while supply chain issues add further pressure.
BNZ’s Senior Economist Doug Steel said that “looking across the PMI sub-indices, they all remain well below their historical averages. Despite talk of an economic recovery, conditions are still very tough”.
