NZ manufacturing PMI dips to 49.9 as Mideast conflict bites. Fuel costs, demand weigh.
The dip below the 50 threshold adds to a run of soft New Zealand data, though the modest scale of the contraction and BNZ’s expectation of a pickup later in the year limit the immediate read-through for RBNZ policy. The split between struggling micro-firms and resilient large firms also points to an uneven recovery rather than broad-based weakness.
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NZ’s BNZ-BusinessNZ PMI fell to 49.9 in May from 50.4, slipping into contraction. BusinessNZ cited weak demand, high fuel costs and Middle East tensions, while BNZ’s Stephen Toplis expects a flat winter before momentum picks up later in the year.
SUMMARY, Source: BusinessNZ, BNZ
- BNZ-BusinessNZ PMI fell to 49.9 in May from 50.4 in April and 52.8 in March, against a long-term average of 52.5
- A reading below 50.0 indicates contraction
- BusinessNZ’s Catherine Beard cited weak customer demand, high fuel prices and Middle East conflict as key drags
- Stocks of finished goods (53.8) and deliveries (51.9) rose, while production, employment and new orders were roughly flat near 50.0
- Micro-firms (0-10 employees) struggled most, with a sub-index of 46.0
- Large firms (101+ employees) outperformed, with a sub-index of 57.6
- BNZ’s Stephen Toplis expects a flat winter for the sector but sees broader economic momentum picking up later in the year, Middle East permitting
New Zealand’s manufacturing sector slipped back into contraction in May, with the BNZ-BusinessNZ Performance of Manufacturing Index falling to 49.9 from 50.4 in April and 52.8 in March, below the long-term average of 52.5. A reading under 50.0 signals contraction.
BusinessNZ’s Catherine Beard described the result as disappointing, pointing to a combination of weak customer demand, elevated fuel prices and the ongoing conflict in the Middle East as headwinds for manufacturers.
The sub-indexes painted a mixed picture. Firms continued building stocks of finished goods (53.8) and getting deliveries out (51.9), but production, employment and new orders all hovered close to the neutral 50.0 mark, suggesting underlying activity is essentially flat rather than sharply deteriorating.
The divergence by firm size was notable. Micro-firms with up to 10 employees struggled most, posting a sub-index of just 46.0, while large firms with more than 101 employees performed strongly, at 57.6, highlighting an uneven sector experience.
BNZ’s Stephen Toplis said the sector is likely to move through a flat patch over winter, but added that, Middle East developments permitting, the broader economy should regain some momentum towards the end of the year, with no reason to expect manufacturing to lag behind that recovery.
This article was written by Eamonn Sheridan at investinglive.com.