BNZ senior economist Craig Ebert said the manufacturing sector faced international and domestic pressure. Photo: 123RF
The manufacturing sector has slipped back into contraction, as production slumps to its lowest level since the last nationwide Covid-19 lockdown.
The BNZ-Business New Zealand Performance of Manufacturing Index (PMI), fell 3.6 points in March to a seasonally adjusted 48.1.
A PMI below 50 indicated contraction and the result was well below the long-term average of 53.
Production contracted for the second consecutive month, falling further to 43.3 - which, outside the Covid-19 lockdowns, was the worst result since 2009.
New orders also fell into contraction, falling from 46.7 to 51.5. Employment fell from 55.2 to 46.7.
BNZ senior economist Craig Ebert said the manufacturing sector faced international and domestic pressure.
"Domestically, of course, we've had the recent weather effects which have particularly affected some of the manufacturing sector."
Feedback in the survey around the impact of weather was isolated to a small number of regions in the North Island.
"So there may be an issue with that [severe weather impacting manufacturing activity] bearing in mind also, of course, that New Zealand manufacturing comprises a lot of food processing and those were the bits that were affected a lot, particularly around horticulture," Ebert said.
He said New Zealand's shrinking manufacturing sector was similar to overseas trends.
While the March PMI was "disappointing", things were not negative in the longer-term context. He pointed to the NZIER's recent Quarterly Survey of Business Opinion, which indicated an encouraging outlook for output, employment and investment.
