New Zealand BusinessNZ Performance of Manufacturing Index ticked up from 48.8 to 48.9 in May, staying well below long-term average activity rate of 53.0. Looking at some details, production dropped from 47.0 to 45.7. Employment rose from 47.7 to 49.5. New orders rose from 49.6 to 50.8. Finished stocks dropped from 52.5 to 51.5. Deliveries dropped from 50.7 to 46.0.
BusinessNZ’s Director, Advocacy Catherine Beard said: “New Zealand’s manufacturing sector has remained in a relatively tight band of contraction for the last three months. While the overall activity result has crept upwards over that time.”
BNZ Senior Economist, Craig Ebert stated that “the range of results in the sub-components is mirrored in the breadth of issues manufacturers are now highlighting in the survey. Gone is the dominance of supply-side laments, especially regarding staff. But new negatives have arisen, for all of them to (still be) outnumbering the positive issues referenced”.
BoJ holds steady, core CPI to decelerate towards middle of fiscal 2023
In a widely expected move, BoJ today unanimously voted to maintain its existing ultra-loose monetary policy. The central bank kept short-term policy rate at -0.10% under its yield curve control. Yield target on 10-year JGB remains around 0%, with fluctuation band allowed also maintained at about plus and minus 0.50% from the target level. BoJ reiterated its commitment to carry on with its Quantitative and Qualitative Monetary Easing with Yield Curve Control “as long as it is necessary” and affirmed it “will not hesitate to take additional easing measures if necessary.”
In its accompanying statement, BoJ noted that it anticipates Japan’s economy to witness moderate recovery by around middle of the fiscal year 2023. “Thereafter, as a virtuous cycle from income to spending gradually intensifies, Japan’s economy is projected to continue growing at a pace about its potential growth rate,” the central bank said.
Discussing the inflation outlook, the bank stated: “The year-on-year rate of increase in the CPI (all items less fresh food) is likely to decelerate toward the middle of fiscal 2023, with a waning of the effects of the pass-through to consumer prices of cost increases led by the rise in import prices.
“Thereafter, the rate of increase is projected to accelerate again moderately, albeit with fluctuations, as the output gap improves and as medium- to long-term inflation expectations and wage growth rise, accompanied by changes in factors such as firms’ price- and wage-setting behavior.”
Full BoJ statement here.