Australian PMI returns to positive

The Ai Group’s Performance of Manufacturing Index (Australian PMI), has returned to positive territory in July.

The index climbed 1.9 points to reach 51.3. Readings above 50 indicate an expansion of activity in the sector.

In June, the Australian PMI dropped below 50, indicating a contraction in the sector, for the first time in nearly three years. Chief executive of Ai Group, Innes Willox, highlighted the areas where manufacturing in Australia has grown.

“Australian manufacturing edged back into growth in July as continued expansion of the food & beverages, chemicals, and building-related products sectors outweighed ongoing deterioration in activity in the metal products and textile, clothing, footwear, paper & printing sectors,” said Willox.

Willox highlighted that machinery and equipment manufacturers were helped by infrastructure funding and that although total production was low, exports grew due to low exchange rates and overseas demands for food, beverages, pharmaceutical, and cosmetic products.

Just over half of the indexes grew in July. Supplier deliveries, new orders, exports, finished stocks and employment increased, however, production, sales, input prices, selling prices and average wages decreased.

By sector, the segment of the manufacturing industry with the greatest improvement was building, wood, furniture, and other at 63.7. The sector that experienced the greatest fall was textiles, clothing, footwear, paper, and printing, which fell 3.5 points to 39.1.

Willox noted that these indicators pointed towards a positive second half of 2019.

“Pressures on manufacturers’ margins continued in July in the face of weak domestic sales and selling prices even though the pace of increases in wages and other input costs eased. In encouraging pointers for the months ahead, both new orders and employment expanded in July,” said Willox.

The Australian PMI has been collecting data since 1992 and uses ABS industry output data for its calculations.