Manufacturing

Australian PMI®: Manufacturing performance lifts in April 2019

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The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) rose by 3.8 points to 54.8 in April 2019, indicating faster growth across the manufacturing sector as sales, supplier deliveries and new orders all bounced back into positive territory (readings above 50 points indicate expansion in activity, with the distance from 50 indicating the strength of the increase).

Ai Group Chief Executive Innes Willox said: “Australia’s manufacturing industry expanded in April (2019) with production, sales, exports and new orders all gaining ground. Advances were most marked in the food & beverages sector which is the largest component of domestic manufacturing with support from chemicals manufacturers and a range of smaller sub-sectors including wood products, clothing & textiles, paper and printing. Both the metal products and machinery & equipment sectors contracted further in April (2019), weighed down by flow-on effects from drought and the downturn in construction activity along with some reported hesitancy to invest associated with the upcoming federal election. Employment growth eased in April (2019) while pressure on producer margins continued with selling prices unable to keep up with wage and input price movements. Elevated energy prices remain the largest concern for many manufacturers with stable and effective policy in this area a key area of interest,” Mr Willox said.

  • Australian PMI®: Key Findings for April 2019:
  • The Australian PMI® has been stable or positive (50 points or higher) since August 2016 (32 consecutive months).
  • Six of the seven activity indexes in the Australian PMI® indicated expanding conditions in April 2019, with sales (up 7.5 points to 53.9) and supplier deliveries (up 11.5 points to 57.2) rebounding from contraction into expansion and new orders also improving from stability (up 5.6 points to 55.6). Only finished stocks remained in contraction (up 1.8 points to 47.9), while employment slowed but remained in positive territory (down 5.1 points to 51.5).
  • Four of the six manufacturing sectors expanded in April 2019 (trend), led by food & beverages (up 1.6 points to 61.8). Only machinery & equipment (down 1.4 points to 44.6) and metal products (down 0.8 points to 44.7) remained in contraction.
  • The input prices index was largely unchanged in April 2019 (down 0.4 points to 64.7), remaining below its 12-month average (70.8 points) for a second month.
  • The selling prices index strengthened by 1.9 points to 54.9, suggesting that more of the cost pressures from manufacturing inputs are being passed on to customers.
  • The average wages index dropped 3.5 points to 57.7 in April 2019, indicating wage pressures continue to rise across the manufacturing sector – albeit at the slowest rate since October 2017.

Background: 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. An Australian PMI® reading above 50 points indicates that manufacturing activity is expanding; below 50, that it is declining. The distance from 50 indicates the strength of expansion or decline. Australian PMI® results are based on responses from a national sample of manufacturers that includes all states and all sub-sectors. The Australian PMI® uses the ANZSIC industry classifications for manufacturing sub-sectors and sub-sector weights derived from ABS industry output data. Seasonally adjusted and trend data are calculated according to ABS methodology. The Australian PMI® commenced in 1992. More information about the history and methodology of the Australian PMI® is available online.

Source: Ai Group

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