- BusinessNZ
New Zealand's manufacturing activity slowed last month, according to the latest BNZ-BusinessNZ Performance of Manufacturing Index. The seasonally adjusted PMI for February declined to 56.0, down 2.0 points from January. New Zealand's manufacturing industry has now been in expansion for 39 months in a row. However, the employment index plunged to 48.5 in February, down from 54.7 in January.
While the New Zealand economy is growing at above 2% per annum, weak inflation expectations, low dairy prices, as well as clouded global economic outlook spurred a surprising interest rate cut from the Reserve Bank of New Zealand earlier this week. The central bank slashed unexpectedly the Official Cash Rate to a record low of 2.25%. Yet, the RBNZ revised upwards its economic growth forecasts. The central bank now expects annual average economic growth rate of 2.3% this year, compared with 2.2% in the December forecasts, and a 3.1% growth pace, an upgrade from its previous forecast of 2.9%. Growth is expected to be supported by high immigration, construction activity, tourism and loosen monetary policy. Meanwhile, financial markets are expecting one more rate cut from the RBNZ this year, with most economists betting on June as the most likely timing for the move.
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