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New Zealand manufacturing remained firmly in expansion in July, though momentum moderated after June’s exceptional surge. BusinessNZ PMI Manufacturing fell from 60.1 to 54.3, still comfortably above 50 expansion threshold and long-term average of 52.5. All five sub-indices remained above 50, with Production easing from 59.2 to 57.3, Deliveries from 57.6 to 55.8, Employment from 55.6 to 52.8, and Finished Stocks from 56.9 to 53.2.

Most notable slowdown came from New Orders, which dropped sharply from 64.1 to 53.3, suggesting forward demand normalized much faster than current production. Business sentiment was also considerably less upbeat than headline PMI, with 57% of respondent comments negative. Manufacturers continued to cite Middle East conflict, high fuel and raw-material costs, weak customer spending and election uncertainty as concerns, although steady order books and stronger export sales provided some offset.

Overall, July reading looks more like normalization from an unusually strong June than a renewed downturn. As BNZ Senior Economist Doug Steel noted, month-to-month volatility is common and 54.3 is “not an immediate cause for concern.” Still, sharp retreat in New Orders and deterioration in sentiment warrant attention, particularly if cost pressures stay elevated. For RBNZ, data continue to point to an expanding manufacturing sector, but with enough moderation to avoid adding materially to already hawkish policy expectations.

Data Summary

Key Takeaways

• New Zealand PMI Manufacturing fell from 60.1 to 54.3 in July, but stayed above both 50 expansion threshold and long-term average of 52.5.
• Every major sub-index remained in expansion, indicating broad activity stayed positive despite slowdown from June’s exceptional reading.
• New Orders fell most sharply, from 64.1 to 53.3, pointing to much softer forward demand momentum.
• Production remained strongest component at 57.3, while Employment was weakest at 52.8.
• Sentiment was less encouraging than activity data, with 57% of respondent comments negative amid high fuel, freight and raw-material costs, Middle East tensions and cautious customer spending.
• July is best read as normalization rather than a renewed downturn, but weaker New Orders make upcoming surveys important for confirming whether expansion can hold.

Full NZ BNZ PMI release here.

Chicago Fed President Austan Goolsbee said recent US inflation data have been “a little better,” raising hope that price growth can resume its decline toward Fed’s 2% target as effects of tariffs and Iran-war oil shock fade. Speaking Thursday in an interview with Fox News, Goolsbee said, “If we can get some of this stuff into the rearview mirror then I think we get back on what I was calling the golden path, which is inflation heading back to 2%.” He nevertheless stressed that inflation around 3% remains “too high” even as latest readings provide some encouragement.

Goolsbee acknowledged that disinflation had previously stalled and even started moving in wrong direction, but said recent data may be changing that picture. “For a couple of months, we’ve been getting a little bit better readings and hopefully that will continue,” he said. July CPI and PPI both came in relatively benign this week, reinforcing possibility that earlier tariff and energy shocks are fading rather than becoming embedded in broader price pressures.

For policy, Goolsbee’s remarks support patience while Fed determines whether improvement is durable. He described economy as “fairly stable” and said policymakers are “mostly watching the inflation component,” suggesting there is little urgency to change rates while incoming price data continue to improve. His “golden path” therefore depends on temporary shocks moving into rearview mirror and inflation continuing toward 2% without renewed deterioration.

Key Takeaways

• Chicago Fed President Austan Goolsbee said recent inflation data have been “a little better,” raising hope that disinflation can resume.
• He sees potential return to Fed’s “golden path” if tariff effects and higher oil prices from Iran war move into rearview mirror.
• Goolsbee stressed inflation around 3% is still “too high”, so recent improvement does not amount to an all-clear.
• He acknowledged inflation progress had previously “stalled out a little bit and was going the wrong way,” making latest two months of better readings more significant.
• Broader economy still feels “fairly stable,” leaving Fed primarily focused on whether inflation continues to improve.
• His message supports policy patience: if temporary shocks fade and disinflation persists, Fed can keep rates steady while inflation moves back toward 2%.

Cleveland Fed President Beth Hammack reiterated Thursday that Fed should raise rates now, arguing current policy is not providing enough restraint to bring inflation back to 2% quickly enough. Speaking at Dayton Area Chamber of Commerce in Dayton, Ohio, Hammack pointed to businesses still eager to borrow and invest, warning that excessive growth could add to price pressures. “We need to make sure that we’ve got some amount of restraint coming from policy,” she said, so inflation can move from above 3% back toward Fed’s objective.

Hammack acknowledged that inflation data have improved over past two months, but said that was not enough to convince her disinflation will persist. “I don’t have confidence that we’re going to continue to see that or that we’re going to see them low enough that it’s going to bring us back down to that 2%,” she said. She also challenged idea that Fed can tolerate a very gradual return to target, asking, “If it takes us another three or four years to get there, is that OK?” Her concern is not simply whether inflation eventually reaches 2%, but whether current policy gets there fast enough to preserve credibility.

That leaves Hammack firmly on hawkish side of Fed debate after dissenting at July meeting in favor of higher rates. She cited businesses pre-emptively raising prices because they expect future cost pressures, as well as household strain from high gasoline and living costs, as evidence that prolonged inflation carries real consequences. Her conclusion was explicit: “I think that we need to act now,” because current rates imply too slow a glide back to target. For markets, message is that two softer inflation reports have not changed her preference for immediate tightening.

Key Takeaways

• Cleveland Fed President Beth Hammack reiterated that Fed should raise rates immediately, arguing current policy is not restrictive enough to return inflation to 2% quickly enough.
• Hammack said businesses are still eager to borrow and invest, which could keep demand strong and add to price pressures.
• She acknowledged inflation has improved over past two months but said, “I don’t have confidence that we’re going to continue to see that.”
• Hammack challenged a slow return to target, asking, “If it takes us another three or four years to get there, is that OK?”
• She also warned persistent inflation may be changing business pricing behavior, with firms raising prices in anticipation of future cost pressure.
• Her conclusion was explicit: “I think that we need to act now.” That keeps her firmly among Fed’s most hawkish voices after dissenting for a hike in July.