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Manufacturing

Manufacturing stabilises in November 2020

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) declined by 4.2 points to 52.1 in November 2020, indicating expanding conditions but at a slower rate than in October (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion).

Ai Group Chief Executive Innes Willox said: “The manufacturing sector was broadly stable in November after a return to positive territory in October. Growth was strongest in the diverse textiles, clothing, footwear, paper & printing group, the machinery & equipment sector as well as in the metal products and chemicals sectors. The large food & beverages sector declined sharply in the seasonally adjusted measure as exports, supermarket sales and low demand in tourism areas took a toll. November saw the long-delayed resumption of growth in Victoria – its first month of manufacturing expansion since March. In contrast, South Australia, while continuing to grow, was held back from a more positive result by the lost production in its three-day shutdown. Encouragingly, both new orders and employment continued to grow in November, pointing to the prospect of a continuing recovery as we head towards the end of the year,” Mr Willox said.

Australian PMI®: Key Findings for November 2020:

  • All seven activity indices in the Australian PMI® declined from the October results, but four remained in expansion in November (see table below). Finished stocks fell into contraction (down 6.9 points to 44.3) while exports were largely stable across most manufacturing sectors (down 2.7 points to 50.0).
  • Four of the six manufacturing sectors in the Australian PMI® expanded in November, but the building materials, wood, furniture & other products sector (down 11.7 points to 43.8) and the large food & beverages sector (down 20.8 points to 43.1) slid steeply into contraction – the latter’s large decline due to various factors including falling supermarket sales, low demand in tourism regions and flat export markets.
  • The input price index eased slightly in November 2020 (down 2.0 points to 64.6), indicating marginally slower price increases, while selling prices remained stable (down 4.0 points to 49.6).
  • The average wages index (up 2.9 points to 60.2) rose back above its long-run average (58.6 points), most likely on the back of manufacturing award increases implemented in November 2020.

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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