January’s activity for New Zealand’s manufacturing sector again showed a healthy level of expansion, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
The seasonally adjusted PMI for January was 55.2 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining). Although this was 0.9 points lower than December, it was still above the average of 52.5 since the survey began.
BusinessNZ’s Director of Advocacy, Catherine Beard, said that the January result starts the year in the right direction after a lacklustre 2025.
“All five sub-index values were again in expansion during January. This was led by the two key indices of Production (56.6) and New Orders (56.4), followed by Deliveries (53.3). Employment (52.9) recorded its third straight monthly expansion, which had last occurred in the first few months of 2025.
Despite the PMI remaining in expansion during January, the proportion of positive comments from respondents stood at 47.7% for January, down from 57.1% in December and 54.4% in November. A number of manufacturers reported weak demand, citing Christmas and summer holiday shutdowns disrupting production, skewing orders, and extending the seasonal shutdown into the new year.
BNZ’s Senior Economist Doug Steel said that “the January PMI provides further evidence that the economy has finally turned the corner. It is consistent with our forecasts and a breadth of indicators suggesting decent economic growth”
Manufacturing Snapshot
Swift growth
The Performance of Manufacturing Index (PMI) has started the year on a strong footing. The index broadly maintained its level at 55.2 in January, following its sharp jump up in December.
Above average
Looking under the hood, recent strength is broad based with four of the five PMI subcomponents sitting above their long-run average.
Employment turning
Last Wednesday’s official Q4 labour market data presented a mixed picture. Employment growth was stronger than expected and accompanied by a rise in labour force participation which saw the unemployment rate nudge up to 5.4%.
Similar story in the US
Looking offshore, the US ISM Manufacturing Index jumped up from 47.9 to 52.6 in January, its highest in over three years and well above expectations.
