Food and beverage keeps manufacturing positive

The Australian manufacturing sector has remained in positive territory for the month of October, with the Australian Industry Group Performance of Manufacturing Index (Australian PMI) coming in at 51.6.

This indicator of expansion in the sector remains positive, despite a 3.1 point drop from the previous month.

According to Ai Group, an earlier-than-expected boom in the food and beverage sector buoyed the sector, while other segments of the industry recorded less positive results.

Other strong sectors included the chemical, and equipment and machinery sectors.

“Growth in these sectors was sufficient to offset further weakness among building products, metals and TCF, paper and printing manufacturers. The overall pace of expansion weakened with a slower rise in employment, and a contraction in new orders overshadowing rises in sales and production,” said Ai Group chief executive, Innes Willox.

Willox noted that a downturn in the construction sector led to building products not performing as well, while an expanding mining sector helped grow the machinery and equipment and the chemical sectors.

Willox however cautioned that the rest of 2019 may see a downward trend.

“There are indications of a bring-forward of Christmas-related sales. This, together with a slight decline in new orders will have manufacturers wary about the sector-wide performance in the coming months,” said Willox.

Strong demand in some areas from the United States lifted the exports index into positive territory, at 51.8, a 2.2 point increase. On the other side, new orders contracted by 8.8 points to 48.3, and input prices increased to 74.7 points.

Selling prices was another area of concern, dropping by 3.9 points to 45, the lowest result since December 2018.