View PMI Time Series Data

Catherine BeardExecutive DirectorManufacturingNZ

17 January 2020

“The manufacturing sector averaged 50.9 over 2019, compared with 53.8 for 2018 and 56.2 for 2017. While the first half of the year managed to just keep its head above water, the second half saw four of the six months in contraction. “Looking at the sub-index values for 2019, the key results for production and new orders averaged 50.1 and 51.7 respectively. Employment struggled to gain traction, averaging 49.4 over 2019. At this stage there is not much evidence to suggest the first half of 2020 will see a noticeable improvement. BNZ Senior Economist, Craig Ebert said that “the December result was disappointing. After a couple of months flirting with positivity, the PMI dipped back just below the breakeven line again”.

New Zealand’s manufacturing sector fell back into contraction for the last month of 2019, according to the latest BNZ - BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI for December was 49.3 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). This was a second consecutive decrease in activity, and the lowest result since September.

BusinessNZ’s executive director for manufacturing Catherine Beard said that the contraction experienced in December was symptomatic of how 2019 played out for the sector.

No Xmas cheer

BNZ - BUSINESSNZPERFORMANCE OFMANUFACTURINGINDEX

49.3 -1.9 contractingDecember Value Monthly Change Slower rate

QSBO expectationsHaving said this, the QSBO also pointed to the manufacturing sector probably being through its worst now. Respondents expected output over the coming 3 months to pick up noticeably, for example.Read more →

CapacityFor the meantime, capacity utilisation in New Zealand’s manufacturing industry has come off the boil, to an extent. The QSBO variable on this – known as CUBO – eased to 91.0% in the December quarter, from 92.5% in the September quarter, and 92.7% back in June.Read more →

The PMI It’s disappointing. After a couple of months flirting with positivity, New Zealand’s Performance of Manufacturing Index (PMI) dipped back just below the breakeven line again in December.Read more →

QSBO reports A sense of struggle could also be extracted from the manufacturing section of Tuesday’s NZIER Quarterly Survey of Business Opinion (QSBO).Read more →

Manufacturing Snapshot

View full BNZ Manufacturing Snapshot

Craig EbertSenior Economist

Main Indices Regional Results

Production

Employment49.9

Deliveries50.7

New Orders51.0Finished Stocks

52.8

51.3

46.5

48.1

56.9

48.2

July 2014 - December 2019

BNZ - BusinessNZ PMI Time Series

National Indices Dec2018

Aug2019

Sep2019

Oct2019

Nov2019

Dec2019

BNZ - BusinessNZ PMI

Production

Employment

New Orders

Finished Stocks

Deliveries

View PMI Time Series Data

Results are seasonally adjusted

PMI Time Series Table

50.752.651.347.448.559.6

52.849.248.749.152.557.6

51.054.056.051.044.956.5

49.949.150.050.050.252.0

48.249.452.446.549.655.0

49.351.252.648.848.655.0

Level 6, JacksonStone House, 3-11 Hunter Street, Wellington 6140+64 4 496 6444 | admin@businessnz.org.nz

ssummers@businessnz.org.nz

Stephen Summers:

Technical Comment

04 474 6799

Craig Ebert:

04 496 6560

Catherine Beard:

For media comment, contact:

Media CommentSponsor StatementBNZ is delighted to be associated with the Performance of Manufacturing Index (PMI) and BusinessNZ.

The association brings togetherthe significant experience of leading business advocacy bodyBusinessNZ, and business financespecialist BNZ.

We look forward to continuing ourassociation with BusinessNZ and associated regional organisations, and to playing our part in theongoing development of the NewZealand manufacturing sector.

50.1 2 January 2019

J.P. Morgan Global Manufacturing PMITM

International Results

USA

Australia

Eurozone

UK

China

Japan

NZ46.3

52.447.5

51.5

48.3

49.3

48.4

04 496 6564

17 January 2020

bnz.co.nz/research

Page 1

Manufacturing Snapshot RESEARCH

The PMI

It’s disappointing. After a couple of months flirting with positivity, New Zealand’s Performance of Manufacturing Index (PMI) dipped back just below the breakeven line again in December. As such, its index reading of 49.3, from 51.2 in November, was even further adrift of its long-term average of 53.3. Production remained the biggest laggard, with its index slipping to 48.2, from 49.4. New orders, meanwhile, moderated to 51.0 – clearly below its statistical norm (55.0). The PMI employment indicator, at 49.9, was only fractionally below trend, while the bounce in inventory (52.8, for 49.2) was nothing outlandish, in broad respect.

QSBO Reports

A sense of struggle could also be extracted from the manufacturing section of Tuesday’s NZIER Quarterly Survey of Business Opinion (QSBO). For example, reports of output regarding the past 3 months were roughly flat, albeit not negative as they were for the prior quarter. Similarly, respondents’ reported new orders as being down slightly, although nowhere near as weak as they were 3 months before that. Interestingly, there was also a clear rise in overdue debtors assailing the manufacturing sector, according to the QSBO.

QSBO Expectations

Having said this, the QSBO also pointed to the manufacturing sector probably being through its worst now. Respondents expected output over the coming 3 months to pick up noticeably, for example. The forward view was likewise stronger than it was last quarter, with respect to orders, investment in plant, machinery and buildings, export sales and, at the margin, employment. There was also a sense of a turning point, in that profit indicators were looking much less dire, as cost indicators, while still strong, were not as intensive as they were over the earlier part of last year. And while there was an increase in inventory reported amongst QSBO manufacturers, they didn’t view it as anything “too high”.

Capacity

For the meantime, capacity utilisation in New Zealand’s

manufacturing industry has come off the boil, to an extent. The

QSBO variable on this – known as CUBO – eased to 91.0% in the December quarter, from 92.5% in the September quarter,

and 92.7% back in June. However, with its long-term average

being 90.0%, the latest result is still above normal. It’s been a

similar story on staffing difficulties for manufacturers, to a point. While the QSBO gauges on these aren’t as severe as

they were at the start of 2019, they were still relatively

significant by the end of it. Like for the economy as a whole,

these series suggest a still-tight labour market, inferring a relatively low unemployment rate.

As You Were

Pay Attention

But A Turning Point?

Just a Little Less Tight

craig_ebert@bnz.co.nz

Manufacturing Snapshot 17 January 2020

bnz.co.nz/research

Page 2

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