Performance of Manufacturing Index contracts for 20th month in a row

The manufacturing sector's dismal showing has returned with improvements over the past few months wiped out.

The BNZ-Business New Zealand Performance of Manufacturing Index fell 1.2 points in October to 45.8 - the 20th consecutive month of contraction.

A reading below 50 indicated contraction, and followed slight increases over the previous three months.

A slump in production was the biggest driver, but contraction was broad-based.

However, BNZ senior economist Doug Steel said new orders improved to their best level since May 2023, and while contractionary, it offered some hope.

"It's still a smidge under 50, so still suggesting new orders are going backwards but just not quite at the same rate," Steel said.

But he said the improvement suggested demand was "starting to pick up".

"We've seen in the past that new orders tend to lead the other factors like production, as you'd expect, employment and the like."

Steel said if new orders continued the trajectory, expansion (a reading above 50) was not far away.

"But we're not there yet, but maybe it does offer some hope for the recovery into the new year."

Steel said the PMI suggests inflation pressure will continue to ease, supporting the case for further rate cuts.