March was best month in over a decade for Australian manufacturing

Australian manufacturing has recorded both a ninth straight month of growth and the best monthly expansion since April 2004, according to the Australian Industry Group’s Performance of Manufacturing Index survey results.

The sector “surged” in March, notes the Ai Group, with the overall PMI up 4.6 points to 58.1.

Any result above 50 indicates expansion.

Five of eight sub-sectors were in growth. The largest – food, beverages, and tobacco – led the way with a record result of 71.0 (up 9.3 points). Significantly, large machinery and equipment recorded its first plus-50 result since January 2012.

“[It] has been buffeted by the step-down in mining investment and the fading auto assembly sector, moved out of contraction in March for the first time in more than four years,” said Innes Willox, the Ai Group CEO, in a statement.

The continued robust results were thanks in large part to the overall drop in the Australian dollar, though it has rebounded since the beginning of 2016.

“The local currency is still close to 30 per cent lower against the US dollar and almost 20 per cent lower against the Trade Weighted Index compared with three years ago,” said Willox.

“The positive impacts of this depreciation have taken some time to accumulate as businesses have become more confident that it will be sustained. With momentum positive and new orders growing strongly, the positive trend appears to have some way to run.”