Manufacturing closes financial year on a high note

Credit: Ai Group

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) ended the financial year on a high note, down just 0.1 point to 57.4 to record a 21st month of continuous expansion.

This PMI measures perceived changes in activity levels across Australia’s manufacturing sector from one month to the next. Readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase.

“Manufacturing production, employment, exports and sales were all higher in June, driving the Australian PMI to its longest run of expansion in well over a decade,” Ai Group chief executive Innes Willox said.

Seven of the eight manufacturing sub-sectors expanded in June, with the textiles, clothing, furniture and “other” manufacturing sub-sector’s stable conditions the only exception (down 1.0 point to 49.3). Sub-sectors providing manufactured goods for civil engineering, residential and commercial construction projects continue to report very strong levels of activity: petroleum, coaland chemicals (down 0.9 points to 62.3); metal products (down 1.8 points to 56.2); machinery & equipment (down 0.3 points to 58.9); and non-metallic minerals (down 0.4 points to 63.4).

Activity levels across Australia’s manufacturing sector has improved in each of the past 21 months, the longest stretch of continuous growth since 2005.

Mirroring the headline PMI, the Ai Group said a majority of the surveys activity subindexes continued strengthen in June.

Six of the seven activity sub-indexes indicated expansion in June, with only the finished stocks sub-index remaining stable,” it said.

“The new orders sub-index fell in June but remains expansionary, indicating a strong likelihood of further near-term manufacturing growth. This is despite some participants citing a reduction in new orders due to the approaching end of the financial year.


“With new orders continuing to come in at growing levels, the immediate outlook is for further growth in production and employment. As to the longer term, manufacturers, particularly those in more energy intensive segments of the sector, remain concerned about ongoing uncertainty over energy policy and its dampening impact on the investment needed to ease price pressures,” Willox said.

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) is a national composite index calculated from a weighted mix of the diffusion indices for production, new orders, deliveries, inventories and employment. 

The full report by Ai Group is available here. 

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