BNZ senior economist Doug Steel said the manufacturing recovery had hit a brick wall. Photo: UnSplash/ Silvia Brazzoduro
- Manufacturing activity slumps to 47.5 in May
- New orders tumble to 45.3
- Employment has worst reversal in index history
The recovery in the manufacturing sector has hit a wall.
The BNZ-Business New Zealand Performance Of Manufacturing Index (PMI) slumped by 6.4 points in April to 47.5 - reversing all of its gains this year.
A reading below 50 indicates contraction.
BNZ senior economist Doug Steel said the manufacturing recovery had hit a brick wall and he did not think it was all because of US tariff uncertainty.
"We look across a range of domestic indicators, and there is quite a clear sign of cooling from what looked like quite a good first quarter of the year."
The employment sub-index suffered its sharpest one-month reversal in the index's history, while new orders, production, and deliveries fell heavily to their lowest levels since the end of last year..
Steel said other indicators such as consumer confidence, electronic card spending, filled jobs, and building consents were also looking weaker in the second quarter, which were clearly negative for the growth outlook in the short-term.
"We still think the New Zealand economy can claw its way forward over the course of 2025, but the PMI is yet another indicator that suggests an increased risk that the bounce in GDP... could come to a grinding halt."
He said the Reserve Bank would further cut the official cash rate, with the only issue being when.
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