- New Zealand’s manufacturing sector was in rude health in May
- The Performance of Manufacturing Index rose to 58.5, a 16-month high
- However, NZD/USD’s gains after the fact weren’t huge
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The New Zealand Dollar only got a small lift Friday following the release of a very encouraging snapshot of manufacturing activity.
The Performance of Manufacturing Index registered at 58.5 for May. In the process, it rose very strongly from April’s upwardly revised 56.9 and hit its highest point for 16 months.
Analogous to the Purchasing Managers Indexes released elsewhere, the indicator is compiled by the business advocacy body BusinessNZ. In its logic, any reading above 50 signifies an expansion for the sector in question, so a 58.6 read is very healthy indeed and price action in NZD/USD duly reflected that.
BusinessNZ said that new orders had seen their highest combined three-month level of expansion since 2004 in the period to May. Employment in the sector was at its highest since October 2014.
However, the NZD boost was far from huge and the data come against a backdrop of some pressure for the currency.
It had had already been reined in this week by some weaker-than-expected official growth figures. The key Official Cash Rate has been at a record low of 1.75% since November 2016. It is thought likely to stay there at least for the remainder of this year. The next RBNZ policy meet is on June 22.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX