The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) rose by 1.4 points to 63.2 in June, delivering the highest monthly result since the Australian PMI® commenced in 1992 (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 2020-21 financial year closed on a high note for Australia’s manufacturing sector. Ai Group’s June Australian PMI® pointed to record growth across the sector fuelled by the fastest recorded pace of expansion in each of the food & beverages; machinery & equipment; building materials; and chemicals sectors. Production, employment, and sales exports were all higher than in May although the rate of acceleration generally eased. Exports of manufactured goods surged in June and new orders were also higher, pointing to the likelihood of further expansion in the months ahead. The strength of the recovery continued despite headwinds from COVID outbreaks and associated lockdowns and border restrictions, high freight costs and the widespread difficulties employers are experiencing in filling positions,” Mr Willox said.
Australian PMI®: Key Findings for June 2021
- All six manufacturing sectors in the Australian PMI® expanded in June, with five expanding at a faster pace than in May. Businesses that directly supply the construction sector reported strong results, saying they are investing to increase capacity, increasing employment and diversifying suppliers to keep up with demand.
- All seven activity indices in the Australian PMI® expanded in June. Exports returned to strength, reversing May’s contraction (up 11.3 points to 60.2), while new orders accelerated into very strong expansion (up 5.7 points to 70.6), suggesting confidence for ongoing demand and a further period of strong activity ahead for manufacturers’ sales and production.
- The input prices index moderated in June but remained elevated (down 3.3 points to 78.8). Input prices remain high for various raw materials, due to high global commodity prices for metals, oil and other key inputs. Manufacturers’ selling prices rose for a fifth consecutive month (up 5.3 points to 63.6), suggesting that more manufacturers are passing on some of their higher input costs to customers.
- The average wages index fell slightly in June (down 1.3 points to 61.6), while the capacity utilisation index (82.3%) reduced by 2.8 percentage points from its series high in April and May.
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