Slower industry expansion shows need to address labour shortages

expansion

The Australian Industry Group (Ai Group) Australian PMI dropped by 1.5 points to 52.5 in July, indicating a weaker rate of expansion compared to the previous month. 

“The supply and labour constraints afflicting the Australian economy are weighing heavily on the manufacturing sector. Production and employment both fell in July, as manufacturers struggle with chronic labour shortages and supply chain interruptions,” Ai Group chief executive Innes Willox said. 

“New orders rose this month, but our manufacturers simply can’t meet this demand without more workers. Manufacturing has a key role to play in reducing the inflationary pressures facing Australia. To unlock the industry’s full potential, we need to promptly address skilled labour shortages.” 

Key Findings for July 2022 

Manufacturing activity slowed in July. Most sub-sectors eased but the metal products sectors recovered strongly. 

Labour challenges, supply chain disruptions and high energy prices remain the major structural constraints on manufacturing. 

Input prices declined for the first time since February 2022 but remain at very high levels. Employment declined, reflecting labour shortage pressures on manufacturing businesses. 

Most manufacturing activity indicators declined in July. However, new orders and sales strengthened, despite tight supply chain pressures. 

View all Economic Indicators here, and read the full report here. 

Results above 50 points indicate expansion.
n.a. Results are not available for this sector in this period due to low survey response numbers.