New Zealand factory sector grows at slower pace amid high fuel costs and election uncertainty

The manufacturing sector in New Zealand slowed down slightly in October due to higher fuel costs and uncertainty surrounding the election.

PMI Index Details

The BNZ-Business New Zealand performance of manufacturing index dropped to 54.9 in October from 56.3 in September. Any reading above 50 points to growth, and the sector has now expanded for 16 months in a row. BNZ senior economist Doug Steel noted that despite monthly changes, the overall trend shows steady positive momentum. All sub-indices stayed in expansion territory, with deliveries performing the best while production, new orders, and employment saw a slight dip.

Industry Performance

Steel pointed out that raw material deliveries nearly reached a record high, which suggests factories are busy rebuilding their stock. The textile, clothing, and footwear industry kept up its recent progress, which is a good sign for consumer spending. Despite these positive signs, businesses dealt with headwinds like high fuel prices and a close election result that could delay forming a government.

Context

Economic indexes like the PMI help track the health of a country's industrial output and business confidence. When these indexes stay above 50, it generally points to ongoing economic expansion in the near term.