The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) rose by 2.0 points to 53.5 in July, the first time since October 2019 that a positive result was recorded for two consecutive months.
The expansion was driven by the machinery and equipment sectors (up 3.2 points to 54.3) and the food and beverage industry (up 1.9 points to 59.4).
Ai Group chief executive Innes Willox said manufacturing employment, production and new orders were all higher compare to June results.
“The performance of the sector was in part due to stimulus measures including JobKeeper and the extension of the instant asset write-off arrangements which boosted sales and orders in the machinery and equipment sector,” he said.
However, all other sectors are reporting difficult trading conditions due to the impact of COVID-19 and the underlying weakness of residential construction. Four of the six manufacturing sectors in the PMI contracted in July.
“Against the positive signs from the manufacturing sector, the winding down of stimulus from September, the impact of the Melbourne lockdown and the severity of the outbreak, as well as tougher border restrictions are likely to weigh on the sector in coming months.” Willox said.
Among the key findings for July, six of the seven activity indices in the PMI indicated expansion in July, with only the exports index contracting (down 5.8 points to 41.4).
Expansion in new orders slowed down 3.0 points to 52.7.