The BNZ-BusinessNZ Performance of Manufacturing Index reading for December was 51.2. A reading above 50 indicates manufacturing is generally expanding and below 50, it is declining.The December reading was 6.5 points down from November and the lowest result since December 2012.
Despite the drop from November, the sector had remained in expansion in all months since October 2012.
Mr Toplis said the results were disconcerting, whichever way they were viewed.
Not only was the 51.2 the lowest reading since December 2012, the 6.5 point drop in the index between November and December had only been exceeded twice before and one of those occasions was during the Global Financial Crisis.
All components of the index were in retreat.
"Unlike business confidence indices which should, in theory, foretell future developments, the PMI is telling it as it is. And it doesn’t look great right now."
Anecdotal evidence across the economy suggested there was a post-election hiccup in activity as businesses put off major spending, investment and hiring decisions until there was a greater clarity and, more importantly, understanding of likely policy shifts.
The PMI was consistent with the hypothesis, Mr Toplis said.
Unfortunately, there were also signs future production might come under pressure as the fall in new orders was proving greater than the decline in inventory.
Consequently, stocks of finished products sat above average levels, even though new orders were well below, he said.
The Otago-Southland PMI reading was 58.7, a drop from the 66.6 reached in November, but still well ahead of the next highest region.
The Northern EMA was second highest on 52.4, Canterbury was next on 49.1 and Business Central was bottom on 47.
Otago-Southland Employers Association chief executive Virginia Nicholls said it was pleasing to see the index finish the year just above the average for the past year.
