Manufacturing in Australia slows down after record month

According to the Ai Group, Australia’s PMI fell by 5.6 points to 54.2 in September, indicating a deceleration in growth after August’s spike to a 15-year high (readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase) at 59.8.

Ai Group chief executive, Innes Willox said, “This year’s recovery in manufacturing activity is continuing, but the September Australian PMI suggests that conditions are moderating and growth is decelerating.

“Manufacturing growth was supported by growth in all eight sub-sectors in September (trend). Non-metallic mineral products (mainly building materials) hit a new record high of 75.5 points, reflecting the strength of demand for building-related products.

“Positive sources of local demand for manufacturers in September included apartment and infrastructure construction; mining and agricultural equipment; renewables and utilities. Respondents also reported a rare spike in exports of construction-related products for emergency relief and reconstruction in the US following recent hurricane damage. Last orders are now underway for suppliers of components to Australian auto assembly and the final impacts of this on the manufacturing sector overall will be more evident by year’s end.

“Of great concern to all manufacturers continues to be the impact of energy and gas prices on their bottom line. Mounting energy costs are further squeezing already-fragile profitability,” Willox said.