The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) increased by 3.5 points to 58.8 in February 2021, with the stronger pace of recovery delivering the index’s highest monthly result since March 2018 (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion).
Ai Group Chief Executive Innes Willox said: “Australia’s manufacturers lifted production and employment in February (2021) as sales recovered a large share of the ground lost in 2020. Growth was distributed broadly across manufacturing with particular strength among producers of machinery & equipment and chemical products. The building products sector saw a welcome return to growth on the back of strength in house building and renovations. The large food & beverage sector continued to expand while the metal products sector slipped lower in February. Manufacturers are generally positive about the outlook for the next few months with new orders coming in at a greater pace as restrictions on activity and cross-border travel are hopefully wound back,” Mr Willox said.
Australian PMI®: Key Findings for February 2021:
- Six of the seven activity indices in the Australian PMI® expanded in February 2021, with only the stocks (inventories) index contracting (down 5.6 points to 48.0), perhaps because of buoyant sales in the month (up 15.7 points to 62.2). Production, sales, employment and new orders all improved from the December and January period, with the new orders index (up 5.3 points to 59.9) indicating further strong production in the coming months.
- Five of the six manufacturing sectors in the Australian PMI® expanded in February (see table below), with only the metal products sector reporting mildly negative conditions (down 0.8 points to 48.7).
- The input prices index jumped above its long-run average (67.4 points) to record its highest result since October 2019 (up 9.7 points to 74.1), indicating faster input price increases, on average, for manufacturers. Selling prices, meanwhile, increased only slightly (up 0.4 points to 51.2).
- The average wages index returned to more normal levels in February (up 1.8 points to 58.2) after dropping sharply due to COVID-19 in 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