NZ Manufacturing Activity Accelerates To One-Year High

Kiwi crosses are broadly unfazed by the August reading of BusinessNZ Manufacturing PMI which indicated a faster rate of expansion.

• Headline index improved to 54.9 from an upward revised 53.5, signalling the highest level of activity since Jul 2021. The August outturn was well above the long-term average of 53.1.
• BNZ Senior Economist Ebert: "that manufacturing production, in general, was holding its own in Q2, rather than drooping, was portrayed in the PMI readings for April, May and June. And in July and August the PMI has moved on to suggest an improving tone around underlying growth."
• The data came out the day after New Zealand's Q2 GDP surprised to the upside, prompting ASB to lift its forecast for the terminal OCR level. Although the economy returned to growth on a sequential basis, the m'fing component contracted.
• Short-term rates have edged higher after the release, with the yield on 2-Year NZGBs last +2.2bp. NZ 2-Year swaps are little changed/marginally above neutral levels.
• Pricing around RBNZ rate-hike timeline is virtually unchanged, with the meeting-dated OIS pointing to another 50bp rate hike at next month's MPC meeting.
• NZD/USD remains heavy and last trades at $0.5960 after lodging fresh cycle lows at $0.5956 minutes ago.