Manufacturing activity surges to 4-year high, pointing to stronger GDP growth

New Zealand manufacturing strengthened in the December quarter. Photo / NZME

Manufacturing activity was the highest it had been in four years last month, according to the latest BNZ–BusinessNZ Performance of Manufacturing Index.

The seasonally adjusted Performance of Manufacturing Index (PMI) for December was 56.1 – 4.4 points higher than November and above the average of 52.5 since the survey began.

A PMI reading above 50 indicates manufacturing is generally expanding, while below that it is declining.

BusinessNZ’s director of advocacy Catherine Beard said the December result was a welcome way to end the year, with eight of the 12 months showing some level of expansion.

“All five sub-index values were in expansion during December. This was led by new orders [59.8], which was at its highest level of activity since July 2021,” Beard said.

“Production [57.4] also showed a significant lift in activity, while employment [53.8] continued to recover after a number of months exhibiting declines during 2023.”

The proportion of positive comments from respondents stood at 57.1% for December, which was up from 54.4% for November and 45.9% in October.

Manufacturers reported improved activity, mainly because of seasonal Christmas demand, which lifted domestic sales, orders and short-term workloads.

This was supported by firmer business and consumer confidence, increased export and forward orders, and some gains from new customers, products and infrastructure-related work.

BNZ’s senior economist Doug Steel said the PMI was positive for GDP calculations for the fourth quarter of 2025 and pointed to good momentum heading into the New Year.

“At face value, it suggests upside risk to the positive view we already have for manufacturing and near-term GDP growth forecasts,” he said.

“We have been noting for some months that the likes of the PMI needed to show more upbeat outturns, and relatively soon, to be consistent with our economic forecasts.

“And if the PMI did pick up, it would help give us some comfort that a lift in Q3 GDP last year, confirmed just before Christmas, can be sustained.”

Last month’s data showed GDP rebounded with a 1.1% gain in the September quarter after earlier contractions.

Jamie Gray is an Auckland-based journalist, covering the financial markets, the primary sector and energy. He joined the Herald in 2011.

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