The BNZ-Business NZ Performance of Manufacturing Index (PMI) contracted in May, reversing gains earlier this year.
The seasonally adjusted PMI for May was 47.5, down from 53.3 in April.
A PMI above 50.0 indicates a generally expanding sector, while a below-50 reading shows manufacturing is generally contracting.
BNZ senior economist Doug Steel said the PMI fall was "yet another indicator that suggests an increased risk that the bounce in GDP reported for Q4 2024 and Q1 2025 could come to a grinding halt."
Business NZ director Catherine Beard said the fall was "disappointing to see, given the sector had appeared to have turned a corner at the start of 2025 following a tough 2023-2024 period of contraction."
Manufacturers reported falling demand, weak orders and low business confidence amid rising costs, economic uncertainty and reduced consumer spending.
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