New Zealand's Business NZ PMI recovers to 47.3 from 43.1, but remains in contraction territory

New Zealand's Business NZ Purchasing Manager's Index (PMI) climbed to 47.3 in January, but still remains stuck in contraction territory after a meager lift from the previous month's 43.1.

According to  Business NZ, the New Zealand PMI gave its highest activity reading since May of 2023, but has remained in contraction territory for an eleventh straight month.

Business NZ's Advocacy Director Catherine Beard stated:

"On the positive side, Employment (51.3) was in slight expansion for the first time since February 2023, while New Orders (47.7) improved to its highest level since May 2023. However, New Orders has now remained in contraction for eight consecutive months, which combined with Production (42.1) has meant a sector that is still someway off returning to expansion."

Market reaction

The NZD/USD continues to trade on the high side of near-term medians after a choppy rebound on Thursday, and the pair heads into early Friday trading just above the 0.6100 handle.

About New Zealand's Business NZ PMI

The Business NZ Performance of Manufacturing Index (PMI), released by Business NZ on a monthly basis, is a leading indicator gauging business activity in New Zealand’s manufacturing sector. The data is derived from surveys of senior executives at private-sector companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production or employment.The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the New Zealand Dollar (NZD). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for NZD.