GDP figures reflect difficult manufacturing environment

GDP figures reflect difficult manufacturing environment

The latest GDP numbers, which show the economy shrinking in the September quarter, reflect the difficult operating environment in which many manufacturers find themselves, says the Employers and Manufacturers Association (EMA).

The figures released recently by Stats NZ show the economy shrunk 0.3% in the September quarter, with all good-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 Mr McDonald.

"Alongside this, large number of manufacturers have also been impacted 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.”

Mr McDonald says the situation has been made worse given many manufacturers are still recovering from the impact of the pandemic.

"The pandemic and lockdowns caused unprecedented disruption to production and global supply chains and manufacturers, and this has really impacted their resilience. Supply chains here have also been slower to recover than other parts of the world, with prices also slower to come back down," he says.

"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."

He adds that manufacturers will 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 be doing well, we need our manufacturing sector to be doing well. But that means supporting it with the right policies and incentives that support investment and allow manufacturers to remain competitive.

"The latest GPD 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." 

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