NEW ZEALAND BUSINESS NEWS
Empowering Kiwi Businesses
New Zealand’s manufacturing sector recorded its 15th consecutive month of expansion in September, with the BNZ-BusinessNZ Performance of Manufacturing Index climbing 3.2 points to 56.5.
A PMI reading above 50 signals that the sector is growing; anything below 50 points to contraction. At 56.5, September’s result sits well clear of the survey’s long-term average of 52.5, and is the strongest reading since 2021 once June’s exceptional outcome is set aside.
The improvement was broad. Every sub-index in the survey moved higher during the month, pointing to momentum across production, orders, stock and staffing rather than strength in a single corner of the sector.
Production and new orders both reached 57 in September. Finished stocks were the strongest component at 59, while deliveries came in at 58.8.
Employment had been the weakest part of the survey and sat exactly on the 50 no-change mark in August. It moved to 51.8 in September, putting hiring back into expansion and marking the first clear sign in some months that manufacturers are adding staff rather than holding firm.
The lift in employment matters because it is the sub-index most closely tied to how firms feel about the road ahead. Hiring decisions are harder to reverse than an extra production run, and a move above 50 suggests some manufacturers are prepared to commit to staff costs.
The headline strength is accompanied by a more cautious mood among the firms completing the survey. Of the comments received, 53 per cent were negative — a majority, even in a month when activity improved across the board.
Those negative comments centred on three themes: fuel prices and the cost pressures they create, uncertainty ahead of the election, and the prospect of further interest rate increases.
The gap between what the numbers show and what respondents say is the most striking feature of the September result. Activity measures are improving, while a majority of respondents describe conditions in negative terms.
For operators further down the supply chain, the September survey points to a manufacturing sector that is buying more, producing more and finishing more stock. New orders at 57 and finished stocks at 59 suggest demand is being met with output rather than being left unfilled, which typically flows through to suppliers of inputs, freight and business services.
The employment reading of 51.8 is the one to watch for small businesses competing for staff. Manufacturing has been a soft source of hiring for much of the past year; a return to expansion means more competition for the same pool of workers, and potentially more pressure on wages in roles where manufacturers and other sectors overlap.
The cost side is less comfortable. Fuel prices and related cost pressures remain the leading concern among respondents, and those costs do not stay inside the factory gate. Manufacturers facing higher input costs will look to pass them on through pricing, which feeds through to the businesses that buy their goods.
The election and the possibility of further rate increases are cited as sources of uncertainty. For firms weighing capital spending or new hiring, that uncertainty argues for caution even as order books improve — a tension that shows up in the split between the survey’s activity readings and the tone of its comments.
NZ Business News reports on the decisions, deals and numbers shaping New Zealand business — the companies making them, the policy and market conditions they work within, and what it means for the people running businesses here.