BNZ - BusinessNZ PMI - January 2017

Holiday mode

17 FEBRUARY 2017

Activity in New Zealand's manufacturing sector saw January experience a dip in expansion, according to the BNZ - BusinessNZ Performance of Manufacturing Index (PMI).

The seasonally adjusted PMI for January was 51.6 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was 2.6 points lower than December, and the lowest level of expansion since January 2015. However, the sector has remained in expansion in almost all months since October 2012.

BusinessNZ's executive director for manufacturing Catherine Beard said that while the decrease in expansion for the first month of 2017 was not ideal, it was clear from comments that a number of factors played a part.

“Those who outlined negative comments noted the Xmas/holiday break playing a sizeable role in reduced activity, as did weather conditions. On the flip side, those who outlined positive comments often did not note anything specific, but more business as usual".

"Combined, this meant that the proportion of positive comments dropped from 70% in December to 59.5% in January".

BNZ Senior Economist, Craig Ebert, said "the slowdown in expansion was mainly because of a marked slowdown in its production index, which dampens expectations of a big bounce in the PMI over the short term".

View PMI Time Series Data

The PMI
New Zealand's Performance of Manufacturing Index (PMI) lost more momentum in January. It decelerated to a seasonally adjusted 51.6, from 54.2 in February.
Read more

Industry Breakdown
One of the first things we thought, when we saw the much-slower PMI of January, was that it might reflect weakness in food processing. We certainly expect rural production to dent GDP over the early part of 2017.
Read more

Construction
The other point of caution regarding manufacturing is its dependence on the local construction cycle. We say this with some of the building indicators having lost oomph over recent months.
Read more

Global
And what a purple patch it has been. The NZ PMI has averaged 55.3 over the last 3 years (with not one month of outright contraction - meaning a reading of below 50.0 - throughout). Compare this to the global PMI, which has averaged 51.4 over the same period.
Read more

View full BNZ Manufacturing Snapshot

PMI Time Series Table

Results are seasonally adjusted.

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