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Most of the major manufacturing sector categories showed weakness in July including production, employment, new orders, and deliveries of raw materials.
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The manufacturing sector contracted for the fifth month in a row in July with activity falling to lowest levels in almost two years, when the country was last in lockdown.
The BNZ-Business New Zealand Performance of Manufacturing Index for the month fell just under a point to 46.3, with a reading below 50 indicating a decline in manufacturing activity.
BNZ senior economist Doug Steel said outside of Covid lockdown periods, it was the lowest reading since the days of the Global Financial Crisis, in June 2009, suggesting the sector was under increasing downward pressure.
“July’s weakness was widespread and pronounced across most of the major categories including production, employment, new orders, and deliveries of raw materials,” he said.
“All these components were well below 50 and even further back from their respective long-term norms.”
Steel said the weakness was widespread, with the unadjusted PMI of every major industry falling to sub-50 in a month, which was highly unusual.
“In fact, we have only seen that happen in one month before in the history of the PMI that dates to 2002 (the first Covid lockdown of April 2020).
“Not even during the GFC did all industries post sub 50 results in the
same month.”
The level of new orders was well behind the indicator of inventory stocks, suggesting weakening demand, Steel said.
The data did not bode well for manufacturing’s contribution to economic growth into the second half of the year, he said.
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