Sharechat Logo

New Zealand manufacturers still struggling

Friday 11th October 2019

Text too small?

New Zealand’s manufacturing activity shrank for a third month in September as production hit its lowest level in more than seven years.

The Bank of New Zealand-BusinessNZ performance of manufacturing activity was unchanged from August at 48.4 points, remaining below the 50 level that separates expansion from contraction.

"While it is good to see the sector not declining further, it remains stuck in a tight band of contraction," said Catherine Beard, BusinessNZ’s executive director for manufacturing. "The key to lifting it back into expansion will be a sustained boost to both new orders and production in the months ahead.” 

The latest PMI reading showed the production sub-index fell to 46.2 points from 49.2 in August. It was well below its long-term average of 53.9.

“With this, we should probably expect manufacturing activity to contract again in the 3Q GDP accounts, having done just that in 2Q,” said BNZ senior economist Craig Ebert. 

“Having said this, if it’s a manufacturing recession then it’s an extremely mild one compared to what the industry went through in 2008/09.”  It touched a low of 36.1 points in November 2008.

Gross domestic product expanded 0.5 percent in the three months ended June, following a 0.6 percent rise in the March quarter. It was up 2.1 percent from the same quarter a year earlier. Manufacturing activity fell 0.8 percent on the quarter, weighed down by a 2.8 percent contraction in food, beverage and tobacco manufacturing.

Today's manufacturing report showed the finished stocks index fell to 48.8 points from 52.8 in August. Deliveries fell to 46.4 points from 47.9 in the prior month.

The employment measure just managed to expand at 50.0 points from 49.9 in August. New orders were also above the line for expansion at 50.1 points from 45.9 in August.

Ebert said both the PMI and the New Zealand Institute of Economic Research’s recent Quarterly Survey of Business Opinion paint a "broadly dour picture" around manufacturing. However, each of them also held "some hope that the worst might just be passing.”

The PMI's new orders index has “recovered a semblance of stability” and the employment component has also lifted after being at 42.3 points in July. 

In the case of the QSBO, while many of its activity indicators related to the prior three months were poor, expectations for the coming three months were, by comparison, relatively sound, he said. 

Last week’s QSBO showed that manufacturers were still the most pessimistic of all sectors, even though their confidence lifted slightly.

(BusinessDesk)



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

NZ dollar stalls amid doubts on US-China trade deal
Tourist numbers perk up in August as Aussies more than offset declining Asian demand
Peters to unions: strikes not helpful; no word on Fair Pay Agreements
Oil and gas critical to global emissions reduction effort - BP
Ebos pays A$34m for medical devices businesses
House price inflation ticks higher as sales volumes recover
Fletcher in $31 mln dispute with ministry over Greymouth hospital
NZ dollar eases as markets fret about US-China trade talks
15th October 2019 Morning Report
CTU pressures govt for Fair Pay Agreements

IRG See IRG research reports