Australian manufacturing continues to expand
Australian manufacturing continues to expand

Australian manufacturing continues to expand

The manufacturing sector closed the financial year by extending its unbroken expansionary run to nine months.

The Australian Industry Group’s (AiGroup) Performance of Manufacturing Index (PMI) inched 0.2 points higher to 55.0 in June – a ninth consecutive month of expansion for the manufacturing sector (readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase).

Ai Group chief executive, Innes Willox said “Sales, exports and production all lifted and growth was widespread across the sector.”

There was higher activity in the metal products; machinery and equipment; petroleum, coal, chemical and rubber products; and non-metallic mineral products sub-sectors augmented the further growth of the large food and beverages sub-sector.

“While a lift in new orders indicates that momentum may continue in the near-term, concerns about the impacts of further rises in energy prices are accumulating like storm clouds over the sector and particularly for more energy-intensive industries,” said Willox.

“With policy uncertainties inhibiting investment in energy and energy-using sectors, it is imperative that sensible and bipartisan resolution be reached as soon as possible.”

Key Findings

  • Five of the seven activity sub-indexes expanded in June, with new orders strengthening (up 1.4 points to 59.5) as sales surged (up 6.5 points to 60.9).
  • As in the previous two months, seven of the eight manufacturing sub-sectors expanded strongly in June, with all but the textiles, clothing, furniture and other manufacturing sub-sector (down a further 4.7 points to an historic low of 29.2) exceeding 54 points. The large machinery and equipment sub-sector increased by 0.2 points to 60.1 – its highest monthly result since the current sub-index commenced in 2009.
  • The input prices sub-index increased by 1.1 points to 64.9 in June, while wages dropped a point but remained elevated at 60.4 points.
  • The selling prices sub-index plummeted 9.1 points to 47.1, ending a rare five months of price increases and adding further pressure to manufacturers’ margins.

To access the latest report please AiGroup.

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