Australian manufacturing PMI surges in October

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) has expanded for the first time since July, increasing by 9.6 points to 56.3 in October.

Solid growth in Australian manufacturing saw production, employment, sales and exports moving into positive territory. Readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion.

Ai Group chief executive, Innes Willox, said with the quantity of fiscal support easing in October and tax cuts only just starting to flow through, the lift in sales and the strong growth of new orders are particularly encouraging signs of improving household and business confidence.

“The solid national performance was achieved despite another month of contraction in Victoria. With restrictions in Victoria being lifted there are very good prospects of further strength in the closing months of 2020,” Willox said.

Food and beverage led the way, followed with strong contributions from machinery and equipment manufacturers and with support from firmer growth in the textiles, clothing, footwear, paper and printing group.

The chemicals sector stabilised in October while the pace of contraction eased in both the metal products and building materials sectors.

Respondents across all sectors noted a jump in sales and new orders as a result of pent up demand from the initial activity restrictions. The jump into expansion was driven by large improvements in New South Wales, which rose into expansion, and Victoria, which remained in contraction but improved from a deep contraction in September.