The BNZ-Business NZ Performance of Manufacturing Index (PMI) slipped 4.1 points in May from April with employment contracting, but manufacturing activity overall remained in expansion mode.
The May seasonally adjusted PMI was 54.5, down from 58.6 in April but well up on the 44.1 recorded in May last year.
Any reading over 50 denotes an expansion, with the index recording its ninth straight month of expansion.
Four of the five seasonally adjusted main indices - production, new orders, finished stocks and deliveries - remained in expansion, with employment the one negative, falling back into contraction at 49.3.
"As we suspected, she’s likely to be a bumpy road to recovery," BNZ's economists said.
"After some strong gains over recent months, May’s Performance of Manufacturing Index slowed to a moderate pace of 54.5. This follows less than buoyant signals from the March quarter manufacturing statistics, as published by Statistics NZ earlier this week. And the tempered NZ PMI coincides with the global PMI forming something of a peak during May, as financial markets pared their optimism. There is a sense of taking stock in all of this."
Meanwhile, the JPMorgan Global PMI for April came in at 57.2, easing from April’s near record high, consistent with the New Zealand result. The Australian PMI also grew solidly in May 56.3, although it too eased back from April.
"The comments about market conditions were not quite 50/50 with negative comments being slightly higher (54.3%), than positive (45.7%). Negative comments were largely around low demand/orders and seemed domestically focused, while positive comments were largely relating to exports or industry sectors that are performing better, such as the dairy sector."
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