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New Zealand's Manufacturing Sector Fights On Despite Contraction

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New Zealand's Manufacturing Sector Fights On Despite Contraction

New Zealand's manufacturing sector is seeing the impact of weakening customer demand and higher fuel prices, but remains above the lows seen a few years ago.

Four out of five components that make up the BusinessNZ Performance of Manufacturing Index are still in expansion, even though the index crossed contraction territory to 49.9 in May from 50.4 in April and 52.8 in March.

A reading over 50 shows that the sector is expanding, but a number below that points to a contraction.

Head of Research Stephen Toplis said that the New Zealand economy can gain back momentum by the end of the year, given a possible resolution to the Middle East conflict, leading to a recovery for manufacturers.

BusinessNZ flagged the risk of excess inventories as a wide gap was seen between finished goods stocks and new orders, which it said is "bad news" for future production.

According to a Wednesday report by Westpac, the manufacturing sector is expected to increase by 2.8% of gross domestic product in the first quarter. It remains one of the biggest contributors to GDP as the impact of the Middle East conflict is yet to flow through into activity.

The Reserve Bank of New Zealand on Tuesday reported that manufacturing operating income fell to NZ$35.7 billion in the March quarter, compared with NZ$36.8 billion in the December 2025 quarter.

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