The BNZ-BusinessNZ Performance of Manufacturing Index fell into the red in May, recording the lowest reading the index has reported in almost a year

The BNZ-BusinessNZ Performance of Manufacturing Index (PMI) slid under water in May, showing signs the manufacturing sector is beginning to contract.

The PMI for May was 49.9. A PMI reading above 50.0 indicates the manufacturing sector is generally expanding, while a reading below 50.0 indicates it's declining. 

May’s PMI was 0.5 points lower than April’s 50.4, and below the long-term average of 52.5 over the history of the survey.

May’s PMI is the lowest monthly reading since June 2025 when the PMI fell to 49.3.

BusinessNZ director of advocacy Catherine Beard said it was disappointing to see the PMI slip back into negative territory, even though May’s reading was only just under 50.0. 

“Manufacturers are obviously struggling in the face of a combination of adverse influences, including lack of customer demand, high fuel prices and the conflict in the Middle East,” she said. 

Beard said the finished stocks and delivery sub-indexes of the May PMI had readings of 53.8 and 51.9 respectively, which suggested that firms were adding to their stocks of finished goods and getting deliveries out the door. But production and new orders remained flat with readings of 50.0 and 50.1.

The May PMI’s results also showed that micro-firms – which the PMI classifies as those with 0-10 employees – were struggling the most, reporting a sub-index reading of just 46.0. 

However, at the other end of the scale, large firms – those with 101+ employees, according to the PMI – were performing strongly, with a sub-index reading of 57.6.

BNZ head of research Stephen Toplis said BNZ believes the manufacturing sector is likely to go through a “flat patch” during winter.

“But, Middle East willing, we still think the broader economy can pick up some momentum at the tail end of this year so there is no reason to believe manufacturing will be an exception,” he said.

The manufacturing industry makes up 10% of New Zealand’s Gross Domestic Product (GDP). The GDP figures for the March quarter are set to be released next Thursday. The Reserve Bank has forecast a 1.0% quarterly climb, following on from the reported 0.2% rise in the December quarter. 

ANZ and Westpac are also forecasting an increase of 1% in GDP growth in the first three months of the year, while BNZ anticipates 0.9%, ASB expects 0.8% and Kiwibank is predicting 0.7%.