NZ manufacturing PMI slips to 54.3 after June's 60.1 surge

New Zealand's manufacturing sector expanded at a slower clip in July. The BNZ BusinessNZ Performance of Manufacturing Index came in at 54.3, down from June's 60.1.

The seasonally adjusted reading stayed above May's 51.5 and the survey's long-run average of 52.5. May's 51.5 was the softest of the past three months, June's 60.1 the strongest; July sits between them. A print above 50 signals growth, so the sector remains firmly in expansion. The three months through July average 55.3, roughly three points above the long-run mean, so the underlying pace is solid. The drop of roughly six points in a single month looks like a correction after an outsized June, which is how both economists attached to the release read it.

Catherine Beard, BusinessNZ's director of advocacy, said the easing was expected after such a strong June result. A reading of 54.3 is still a solid outcome, she said. The bigger change, in her view, was a shift in tone among respondents. A majority of comments now run negative, pointing to the Middle East conflict and elevated fuel and raw-material costs. A separate strain of comments cited reluctance among customers to spend, and several respondents flagged uncertainty tied to the upcoming election.

All five sub-indices stayed in expansion. Production led the group at 57.3; deliveries followed at 55.8. A deliveries reading of 55.8 means supplier lead times are still stretching. New orders retreated to 53.3 and finished stocks to 53.2; a finished-stocks print above 50 means inventories are still building, at a slower pace than in June. Employment was the softest of the group at 52.8, roughly four and a half points behind production, the widest gap between any two components in the July report. A reading above 50 means the sector still added jobs on net. Hiring is cooling faster than output.

The comments told a mixed story. Cost pressures stayed the dominant theme, covering fuel, freight, raw materials and the flow-on effects of the Middle East conflict. A meaningful share of manufacturers said order books were steady and export sales stronger, giving them reasons for cautious optimism in the second half. The comments describe export demand holding up better than domestic spending, and new orders at 53.3 were supported in part by those export gains. The split leaves the expansion uneven, with exporters and domestically focused producers telling different stories.