New orders help manufacturing recover in June

Friday 12th July 2019

Manufacturing activity rose in June, thanks to a recovery in new orders which ensured the sector didn’t shrink.

The Bank of New Zealand-Business NZ performance of manufacturing index rose 0.9 points to a seasonally adjusted 51.3 from May and is down from 52.7 a year earlier.

While a reading above 50 indicates activity is expanding, this is the fourth consecutive month the index has been below the survey's long-term average of 53.4.

BNZ described the activity as below par.

“The latest PMI might best be described as doing doggy paddle, with both ups and downs around some of the main PMI sub-index values,” senior economist Doug Steel said. The state of the industry was “actually relatively good given the current global context,” he added.

New orders helped lift the main index higher, rising 2.1 points to 52.8, while the production sub-index also rose, by 4.2 points to 51.0

The finished stocks index also rose 0.8 to 57.6, which Steel said was keeping the index aloft but “likely not in a good way.”

The employment measure fell by 0.5 points to 48.0. It was down from 49.6 at the same time last year and is at its lowest since August 2016. Steel noted that second-quarter labour market reports are also likely to register this weakness in manufacturing jobs.

Deliveries, described by Steel as “just plain soft” also fell by 2.3 points to 48.9. The negative result for deliveries of raw materials is its lowest result since September 2012.

While the sector has avoided deterioration in activity from May, there were still a number of concerns about manufacturing’s current state of play, said Catherine Beard, Business NZ's executive director for manufacturing.

(BusinessDesk)

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