Australian PMI recovery strengthens in February 2021

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) increased by 3.5 points to 58.8 in February 2021.

It is the index’s highest monthly result since March 2018 (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion).

Ai Group CEO, Innes Willox, said Australia’s manufacturers lifted production and employment in February, as sales recovered a large share of the ground lost in 2020.

“Growth was distributed broadly across manufacturing with particular strength among producers of machinery and equipment and chemical products,” he said.

“The building products sector saw a welcome return to growth on the back of strength in house building and renovations.

“The large food and beverage sector continued to expand while the metal products sector slipped lower in February. Manufacturers are generally positive about the outlook for the next few months with new orders coming in at a greater pace as restrictions on activity and cross-border travel are hopefully wound back.”

Six of the seven activity indices in the Australian PMI expanded in February 2021 , with only the stocks (inventories) index contracting (down 5.6 points to 48.0), because of buoyant sales in the month (up 15.7 points to 62.2).

Production, sales, employment and new orders improved from the December and January period, with the new orders index (up 5.3 points to 59.9) indicating further strong production in the coming months.

Five of the six manufacturing sectors in the Australian PMI expanded in February, with only the metal products sector reporting mildly negative conditions (down 0.8 points to 48.7).

The input prices index jumped above its long-run average (67.4 points) to record its highest result since October 2019 (up 9.7 points to 74.1), indicating faster input price increases, on average, for manufacturers. Selling prices increased slightly (up 0.4 points to 51.2).

The average wages index returned to more normal levels in February (up 1.8 points to 58.2) after dropping sharply due to COVID-19 in 2020.

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