New Zealand Manufacturing Hits Strongest Growth in Nearly Five Years

BNZ Head of Research Stephen Toplis said analysts were surprised by the scale of the improvement, describing the jump in the index as far stronger than expected.

New Zealand's manufacturing sector has recorded its strongest monthly performance in almost five years, giving businesses fresh confidence as new orders, production and hiring all gathered pace during June. The latest BusinessNZ-BNZ Performance of Manufacturing Index (PMI) climbed sharply to 59.7 from 51.3 in May, marking the highest reading since July 2021 and sitting comfortably above the survey's long-term average of 52.5.

A PMI reading above 50 signals expansion, and June's result points to a broad-based improvement across factories and industrial businesses. Every major component of the index moved into healthy growth territory, showing that manufacturers are not only receiving more work but are also increasing output and adding staff to keep up with demand.

Small Business and Manufacturing Minister Cameron Brewer described the latest figures as a major step forward for the sector, saying stronger order books and rising production reflect growing confidence across the industry. He noted that businesses are once again bringing in more workers as activity continues to build.

New orders and hiring signal growing confidence

The strongest performer in the latest survey was New Orders, which reached 64.1, suggesting manufacturers are securing a solid pipeline of future work. Production also climbed strongly to 59.4, indicating factories are operating at a faster pace to meet customer demand. Employment rose to 55.8, pointing to renewed hiring as businesses expand their operations.

BNZ Head of Research Stephen Toplis said analysts were surprised by the scale of the improvement, describing the jump in the index as far stronger than expected. The result adds to signs that the manufacturing sector is becoming one of the key drivers of New Zealand's economic recovery.

Manufacturing remains one of the country's largest industries, directly employing more than 220,000 people. It contributes around eight percent of New Zealand's gross domestic product while generating roughly 60 percent of the nation's exports, making its performance closely tied to overall economic strength.

Mr Brewer said the latest data follows a strong March quarter, during which manufacturing made the biggest contribution to economic growth. He believes the latest figures show that the sector's recovery is gaining momentum rather than slowing.

Investment expected to support the next phase of growth

Rising demand is also expected to encourage manufacturers to invest in new equipment and technology so they can increase productivity and expand capacity. The Government says its Investment Boost initiative is designed to help businesses purchase machinery and modern equipment that allows them to meet growing demand while improving efficiency.

According to the Government, New Zealand's manufacturing performance is currently outperforming several major economies, including the United States, China, Japan, the United Kingdom and Australia. Officials see this as a sign that local manufacturers are adapting well despite ongoing global economic uncertainty.

With stronger demand, expanding production and renewed hiring all moving in the same direction, the latest PMI figures paint an encouraging picture for the sector. If businesses continue receiving new orders at the current pace, manufacturing could remain one of the biggest contributors to New Zealand's economic growth through the rest of the year.