Manufacturers eye recovery as war in Iran disruption eases

The manufacturing sector is expected to continue to lead economic growth, helped along with an outsized contribution from small- and medium-sized firms, as fuel and freight costs continue to normalise.

New Zealand's economy grew in the first three months of the year with GDP up 0.8 percent in the March quarter and 1.5 percent up on the year earlier.

Stats NZ data indicates nine of 16 industry groups posted growth, with manufacturing the strongest.

Big manufacturing firms continued to expand through the second quarter of the year, according to the BNZ - BusinessNZ Performance of Manufacturing Index data for April and May.

Activity by large firms with more than 100 employees expanded strongly in April with a score of 56.8 points, while small firms with fewer than 10 employees contracted to 39.2 points.

Anything under 50 indicates contraction.

Large firms continued to expand strongly in May with a score of 57.6 points, while small firms saw activity rise by 17 percent to 46 points.

A spokesperson for inventory software company Unleashed, Greg Roughan, said its data indicates small and medium-sized manufacturers were poised for growth, as inventories built up through the fourth quarter of 2025.

He said the beginning of the first quarter continued the momentum, but the outbreak of war in Iran put a lid on that.

"The start of the year was looking very positive, and I see no reason to think that manufacturers won't continue to perform strongly in this country," he said.

"The Q1 slowdown, dramatic slowdown in sales in Q1, was very, very tough, but I think that's entirely external circumstances, and as that normalises, we should see the New Zealand manufacturing sector really start to fire on all cylinders."

Roughan said manufacturers had survived a prolonged economic downturn and were poised for growth.

"The agility that New Zealand manufacturers have, especially at the small end of the scale, has been honed by crisis after crisis after crisis, and so I think the firms that have survived these very tough few years are really very well positioned to ramp up their activity and respond."