Manufacturing activity contracted last month for the first time in a year as new orders fell to their lowest level in 15 months, according to August’s BNZ-Business New Zealand Performance of Manufacturing (PMI) index.
Seasonally adjusted PMI for August fell to 49.3 from 50.3 in July. It’s the first time since August 2009 that a reading below 50 has been recorded given July's initial 49.9 reading has since been adjusted up to 50.3. A PMI reading above 50 points indicates manufacturing activity is expanding, a reading below 50 indicates it’s contracting.
Of the five seasonally adjusted main indices surveyed, at 47.2 new orders continued to be in contraction and were down 1 point from July to their lowest level in the last 15 months. Deliveries were also in contraction at 49.4.
Production, employment and finished stocks remained in expansion mode although finished stocks were down 1.9 points month-on-month to 50.4.
Business New Zealand and BNZ said they didn’t expect September 4’s big Canterbury earthquake to have an overly negative impact on manufacturing in the province.
“The larger manufacturers escaped relatively unscathed due to newer buildings and most were only briefly interrupted. While some manufacturers will be concerned about a possible downturn in local trading and getting access to buildings, new spending to rebuild the region is expected to have a positive economic benefit in the medium term.”
The BNZ-Business New Zealand PMI is a monthly survey of the manufacturing sector that aims to provide an early indicator of activity levels.
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