NZ manufacturing surges to five-year high, easing a long soft patch
The jump in New Zealand’s manufacturing PMI from 51.3 to 59.7 marks a sharp break from months of soft, near-stagnant readings and points to a broadening domestic demand recovery heading into the second half of the year. Every sub-index moved firmly into expansion, with new orders at 64.1 suggesting the pickup has momentum rather than being a one-month blip, while the improvement in employment sits alongside stronger production and deliveries as a sign firms are responding to fuller order books rather than just clearing backlogs. The result complicates the case for further RBNZ easing in the near term, even as respondents continue to flag Middle East conflict spillover and elevated fuel costs as ongoing cost pressures. Markets are likely to read this alongside upcoming activity data to gauge whether the rebound is broad-based across the economy or concentrated in manufacturing.
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New Zealand manufacturing just posted its best month in nearly four years.
Summary:
- New Zealand’s seasonally adjusted manufacturing PMI rose to 59.7 in June, up sharply from 51.3 in May and 50.6 in April, according to the BNZ-BusinessNZ Performance of Manufacturing Index
- The reading is the strongest since July 2021 and well above the survey’s long-term average of 52.5
- BusinessNZ’s Catherine Beard said positive respondent comments outweighed negative ones for the first time in recent months, at 52%
- New orders led all sub-indices at 64.1, with production at 59.4 and deliveries at 57.3
- Stocks of finished products and employment also moved well above the 50.0 threshold, both pointing to expansion
- BNZ’s Stephen Toplis said the jump was the best reading outside the pandemic bounce-back since May 2017
- Respondents continued to flag Middle East conflict and cost-of-living pressures as headwinds, though these were outweighed by stronger sales and confidence this month
New Zealand’s manufacturing sector expanded sharply in June, with the seasonally adjusted BNZ-BusinessNZ Performance of Manufacturing Index jumping to 59.7 from 51.3 in May and 50.6 in April, its strongest reading since July 2021 and well above the survey’s long-term average of 52.5.
BusinessNZ’s Director of Advocacy, Catherine Beard, described the jump as hugely encouraging, noting it was just as significant that positive respondent comments outweighed negative ones for the first time in recent months, at 52%. She said the result marked a welcome turn after a long stretch of soft data, even as the Middle East conflict and elevated fuel prices continued to weigh on many respondents.
Those cost pressures were still present in the survey commentary, but this month they were outweighed by reports of stronger sales, fuller order books and renewed confidence among manufacturers. Every sub-index moved firmly into expansion territory. New orders stood out at 64.1, pointing to a healthy pipeline of work ahead, while production surged to 59.4 and deliveries rose to 57.3. Stocks of finished products came in at 56.9 and employment at 55.8, both comfortably clear of the 50.0 breakeven line and an encouraging signal for manufacturing hiring.
BNZ Head of Research Stephen Toplis said the scale of the jump was striking, noting the index had surged from a war-affected seasonally adjusted low of 50.6 in April to 59.7 in June, its highest level since the COVID-era bounce-back of July 2021. Excluding that pandemic rebound period, he said, one would need to go back to May 2017 to find a stronger reading.
The result suggests New Zealand’s manufacturing recovery has gained real momentum after months of subdued activity, even as external risks tied to the Middle East and energy costs remain unresolved.
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This article was written by fl6553e4b45d84486a91658a8b3f02bf22 at investinglive.com.