A shift away from spending on goods post-pandemic has seen production in New Zealand's manufacturing sector fall and inventories rise. Photo: 123RF
Manufacturing activity has perked up slightly but is still struggling to get back into expansion.
The BNZ-Business New Zealand Performance of Manufacturing Index (PMI), rose one point in April to 49.1.
A PMI reading below 50 indicates contraction, with the long-term average at 53. The PMI has contracted for five of the past seven months.
BNZ senior economist Doug Steel said the sector remained underwhelming and underperforming.
"Weak new orders indicate softening demand, reinforced by the combination of falling production yet rising inventory. Stocks is the only main index above its long-term average."
Production improved several points but remained in contraction, as were new orders, and employment, while finished stocks moved back into expansion, and growth in new deliveries slowed.
More respondents made negative comments, although they were largely similar to previous months dominated by price pressures, staffing issues and lower demand.
Steel said New Zealand's shrinking manufacturing sector was similar to other overseas economies, and the overall negative tone with all PMI indicators had to be seen in context.
"Post-pandemic there has been a general rotation away from spending on goods back toward spending on services."
"PMI weakness, both in New Zealand and elsewhere, needs to be assessed in conjunction with service sector equivalents, which have been generally firm, before drawing conclusions about the economy at large."