The Employers and Manufacturers Association (EMA) says the latest GDP numbers reflect the difficult operating environment in which many manufacturers find themselves.
The figures released today by Stats NZ show the economy shrunk 0.3% in the September quarter, with all goods-producing industries down this quarter.
EMA Head of Advocacy Alan McDonald says the current economic environment is incredibly challenging for many manufacturers across the country.
“Inflationary pressures have driven up costs while, at the same time, rising interest rates are dampening consumer demand. As a result, many manufacturers have seen their forward orders dry up,” says McDonald.
“Alongside this, a large number of manufacturers have also been affected by significant weather events earlier in the year, which caused major disruption to operations and impacted supply chains.
“As a result, we have seen manufacturing activity, as measured by the Performance of Manufacturing Index (PMI), contracting for most of the year.
McDonald says the situation has been made worse by the fact that manufacturers are still recovering from the impact of the pandemic.
“The pandemic and lockdowns caused unprecedented disruption to production and global supply chains, and this has affected the resilience of manufacturers. Supply chains here have also been slower to recover than other parts of the world, with prices remaining higher for longer.
“As a result, the economic downturn is hitting the manufacturing sector hard. Confidence is low and we are seeing examples of manufacturers delaying investment and reducing staff numbers.”
McDonald says that manufacturers would be looking to the new government to focus on the economy and look at ways it can support the manufacturing sector.
“We welcome the appointment of a Minister of Manufacturing, which we hope signifies the intent of the new government to focus on supporting manufacturing.
“Manufacturing is incredibly important to the New Zealand economy. It contributes about 10% to our GDP, is responsible for 60% of the country’s exports and employs 12% of our workforce.
“If we want our economy to do well, we need our manufacturing sector to be healthy. But that means supporting it with the right policies and incentives that drive investment and allow it to remain competitive.
“The latest GDP numbers should be a wake-up call and we look forward to working with the new government to look at other initiatives to reinvigorate our manufacturing sector so that it can drive our economic recovery.”
