New Zealand’s manufacturing sector slipped back into contraction in May, with the BNZ-BusinessNZ Performance of Manufacturing Index falling from 50.4 to 49.9. While the decline was modest, it marked a notable loss of momentum from March’s 52.8 reading and left the index well below its long-term average of 52.5. The result suggests the sector continues to struggle to establish a sustained recovery amid a challenging economic backdrop.
BusinessNZ Director of Advocacy Catherine Beard said it was “disappointing to see the PMI slip back into negative territory”, pointing to a combination of weak customer demand, elevated fuel costs and the ongoing conflict in the Middle East. The survey details painted a mixed picture. Deliveries (51.9) and finished goods inventories (53.8) remained in expansion territory, but production, employment and new orders were broadly flat around the 50 mark, indicating a lack of underlying momentum.
The survey also highlighted a widening gap between businesses of different sizes. Micro-firms with fewer than 10 employees recorded a deeply contractionary reading of 46.0, while large firms with more than 100 employees posted a strong 57.6. Looking ahead, BNZ Head of Research Stephen Toplis said the sector may endure a “flat patch during winter” but maintained that, “Middle East willing”, broader economic growth could regain momentum later this year. For now, however, manufacturing remains vulnerable to weak demand and the uncertainty created by higher energy costs.
| Indicators | Apr | May |
|---|---|---|
| PMI | 50.4 | 49.9 |
| Production | 51.4 | 50.0 |
| Employment | 53.2 | 49.6 |
| New Orders | 48.0 | 50.1 |
| Finished Stocks | 50.7 | 53.8 |
| Deliveries | 46.8 | 51.9 |
