Analysts at Australia and New Zealand Banking Group (ANZ) note the fall in New Zealand’s Manufacturing gauge is broadly in line with the expectation for Q3 GDP of 0.4% q/q.

• “Total manufacturing sales volumes fell 0.3% q/q in Q3 (seasonally adjusted), following a 2.7% fall in Q2. Of the 13 manufacturing industries, seven experienced a contraction from last quarter (meat and dairy; seafood processing; beverage and tobacco; textile, leather, clothing, and footwear; petroleum and coal products; chemical, polymer, and rubber; non-metallic mineral products manufacturing). 
• Looking forward, the October rebound in the BNZ-BusinessNZ PMI (back into expansionary territory) tentatively suggests core manufacturing activity will pick up in Q4. But the PMI can be volatile on a m/m basis so this week’s read for November (out Friday 10:30 am) will be watched closely.
• Broadly speaking, we think the slowdown in economic momentum is close to bottoming out, and that growth will gradually accelerate from H2 next year. Core manufacturing is expected to follow suit.”