12 Jun 2020

May manufacturing levels bounce to those seen during GFC

12:26 pm on 12 June 2020

Manufacturing activity in May is up on last month, but still moving slowly.

Stock image of boxes with Made in New Zealand stamped on the side.

Photo: 123rf

The BNZ-Business New Zealand Performance of Manufacturing Index (PMI) for May was 39.7, compared with a dismal 26.1 in April.

A reading above 50 points indicates growth, and below contraction.

BNZ senior economist Craig Ebert said it was a recovery "of sorts".

"[It's] still clearly contracting, just not to the extent it was in April. That result for April, of course, traversed the most extreme period of lockdown, related to Covid-19. May benefited from a partial relaxation of the restrictions.

"Still, a negative tone remains evident in the fact that, even with its bounce in May, the NZ PMI merely got back to the sort of levels it sank to during the 2008-2009 recession."

Within the headline number there was some growth, but extreme variation.

Food, beverage and tobacco was up at 52.5, wood and paper at 54.5 - from 16.3 in April - and petroleum, chemical and coal up to 52.8 (unadjusted). In contrast, textile, clothing and footwear was at 19.0.

Production went from 19.1 in April to 38.4 and new orders swung from 16.9 to 40.0.

The only indicator to contract more sharply this month was employment which moved from 41.1 to 39.4.

"We have to wonder where the employment indices will get to, as the wage subsidy schemes continue to be wound down as is starting to occur already," Ebert said.