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The Australian Performance of Manufacturing Index (PMI) has remained in expansionary territory for the eighth consecutive month in May. The pace of expansion has eased by 4.4 points to 54.8, however, indicating a slower pace of growth than last month.
This month’s key findings:
- All seven activity sub-indexes in the Australian PMI expanded in May, although at a slower rate than in April.
- As in April, seven of the eight manufacturing sub-sectors expanded strongly in May, with all but the textiles, clothing and furniture sub-sector (down 2.7 points to 39.4) exceeding 56 points.
- The input prices sub-index expanded at a slower rate in May (down 6.0 points to 63.8), while wages elevated a further 3.0 points to 61.4.
- The selling prices sub-index recorded a fifth consecutive month of expansion in May (down 2.7 points to 56.2), potentially reflecting inflationary conditions but also indicating some relief to manufacturers in being able to pass on more of their cost increases.
“Manufacturers reported further gains in May, building on growth in the previous seven months,” said Ai Group chief executive Innes Willox.
“Demand is relatively elevated for most sub-sectors and employment, sales and new orders are all growing, albeit at more subdued rates. Exports remain a key source of growth, with many manufacturers strongly focused on growing their sales overseas despite stiff global competition.
“Regardless of the shrinking local auto industry and generally low business investment, the important machinery and equipment manufacturing sub-sector again built on what has been an impressive recovery after an extended slump.
“Less positively, slower local retail conditions are having some negative impacts for manufacturers and elevated input costs are an ongoing challenge for everyone, particularly due to rising electricity and gas costs.”