NZD/USD: New Zealand Reports a Contraction in the Manufacturing Sector
THE TAKEAWAY: [PMI survey reports contraction in manufacturing] > [Kiwi declines slightly following the release]> [New Orders continues to grow]
The July BusinessNZ PMI survey reported a contraction in the manufacturing sector for the second time this year, with a print of 49.4. In addition the June figure was revised lower from 50.2 to 50.0, the disappointing announcement drove the NZDUSD lower. The accompanying press release noted declines in employment, production, deliveries, and finished stocks. While New Orders remained strong during the month of July, reporting a figure of 52.9 compared to June print of 51.2.
5 Min MarketScope Chart Created by Adrian Robles
The NZDUSD was trading in a tight range leading up the announcement, but clearly declined following the new release. The initial reaction in the Kiwi was a three pip drop with the pair settling around 0.8067 (at time of writing).
JP Morgan’s Global Manufacturing PMI had already predicted, on a global scale, a decline in the manufacturing sector for the month of July. The Global Manufacturing PMI survey also noted that New Orders are contracting a faster rate than the previous month. Although New Zealand seemed to be one of the exceptions during July, New Zealand’s manufactures reported an increase in New Orders, which are growing at a faster rate than the month prior.