Manufacturers maintain growth for second consecutive month

Local manufacturing activity grew during January for the second month in a row, with the food and beverage sector recording the highest result, according to the latest Australian Performance of Manufacturing Index (Australian PMI). 

Food and beverage manufacturing performance rose to 73.8 PMI points during the month, which is way above the 50-point level separating expansion from contraction.

Australian Industry Group Chief Executive, Heather Ridout says January’s growth – though marginal, up 1.4 points to 51.6 – should be encouraging for the industry.

"Encouragingly, manufacturing held on to positive territory in January to register the second consecutive month of growth, albeit by a slim margin,” said Ridout.

After food and beverage, sectors showing strong growth were wood products and furniture, and transport equipment. PMI reporters estimate growth in the transport sector was due to rising transport system requirements in the mining industry.

However, Ridout says manufacturers should still be on their guard as numerous sectors recorded loss during the period.

The worst-performing sector was textiles, clothing and footwear at 37.7 PMI points. Sectors related to construction also performed poorly.

“At the same time, six of the 12 manufacturing sub-sectors contracted in January highlighting the tough conditions persisting in the sector,” Ridout said.

“Respondents cited ongoing global economic uncertainty and strong overseas competition as factors inhibiting growth in January.”

Across the board, new orders and production remained mostly unchanged, at 49.9 and 50.7 PMI points respectively. PMI reporters say this reflects uncertainty and a “cautious outlook” from the market.

Input deliveries (55.6) and inventories (54.3) showed surprising growth during January however, helping keep the PMI above the crucial 50-level.