The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) fell by 4.2 points to 49.3 in August, indicating broadly stable conditions (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion).
There was significant divergence between the larger manufacturing states, with Victoria’s PMI falling back into contraction (down 9.3 points to 44.0) while NSW (down 5.2 points to 51.0) and South Australia (up 3.3 points to 65.3) continued to indicate recovery. The PMI in Queensland improved but continued to indicate a period of contraction (up 9.7 points to 47.1).
“While the manufacturing sector held on to recent gains with activity broadly stable in August, manufacturers from Victoria, which accounts for about 25 per cent of the national economy, sunk back into negative territory in the month in line with the introduction of severe restrictions on businesses and as local consumer demand was hit hard by the stay-at-home orders. Looking across the country, the pace of growth picked up in the food and beverage, machinery and equipment and textiles, clothing, footwear, paper and printing sectors. Metal products manufacturers saw a mild easing of activity while both the chemicals and building products sectors lost further ground over the month, ” Ai Group chief executive Innes Willox said.
Further findings of six of the seven activity indices in the Australian PMI deteriorated in August compared to July. Production (down 3.0 points to 53.4) and exports (up 10.8 points to 52.2) expanded, while sales (down 5.6 points to 46.6), new orders (down 6.1 points to 46.6) and finished stocks (down 6.9 points to 44.9) contracted. The indices for employment (down 3.2 points to 50.2) and supplier deliveries (down 2.2 points to 49.6) fell but remained indicative of broadly stable conditions.
Three of the six manufacturing sectors in the Australian PMI expanded and three contracted in August (trend). The manufacturing sectors that mainly produce consumable products (food and beverages and the TCF, paper and printing product sectors) expanded as well as the large machinery and equipment sector. Contraction was evident in the more traditional “heavy industrial” manufacturing sectors.
The input prices index fell by 4.2 points to 59.3 points in August (seasonally adjusted), indicating slower price increases for manufacturing inputs. The selling prices index fell by 2.7 points to 46.2, indicating that manufacturers’ selling prices declined, on average, and at a faster rate than in July.