New Zealand manufacturing activity contracts

Manufacturing activity in New Zealand contracted in December, according to BusinessNZ.

The Bank of New Zealand-Business NZ’s seasonally adjusted Performance of Manufacturing Index (PMI) fell to 49.3 from 51.2 in the previous month.

A reading above 50 indicates an expansion in activity, while anything below that threshold indicates a contraction.

BusinessNZ’s executive director for manufacturing Catherine Beard said that the contraction experienced in December was symptomatic of how 2019 played out for the sector.

“The manufacturing sector averaged 50.9 over 2019, compared with 53.8 for 2018 and 56.2 for 2017.  While the first half of the year managed to just keep its head above water, the second half saw four of the six months in contraction,” Beard said.

“Looking at the sub-index values for 2019, the key results for production and new orders averaged 50.1 and 51.7 respectively.  Employment struggled to gain traction, averaging 49.4 over 2019.  At this stage there is not much evidence to suggest the first half of 2020 will see a noticeable improvement.

BusinessNZ’ senior economist, Craig Ebert said “the December result was disappointing.  After a couple of months flirting with positivity, the PMI dipped back just below the breakeven line again”.