Australian manufacturing recession eases

The Australian PMI for May is out and:

 

The latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) moved up by 4.4 points to 49.2 points in May (seasonally adjusted). This signalled the seventh consecutive month of contraction in the manufacturing industry (readings below 50 points indicate contraction). The three-month-moving-average Australian PMI® also remained below 50 points (i.e. contraction), at 47.3 points in May.

Many respondents to the Australian PMI® continued to cite challenging business conditions in the manufacturing sector in May. The Federal Budget has reportedly dampened confidence levels and has delayed or lowered business commitment to new expenditure, while the renewed strength in the Australian dollar this year has seen import competition intensify again.

This month both the production and new orders sub-indexes of the Australian PMI® rose above 50 points (i.e. into expansion). The sales sub-index also expanded, following six months of contraction. However, manufacturing employment contracted at a faster pace in May, while the supplier deliveries and stocks sub-indexes both pointed towards contraction this month (i.e. below 50 points). Conditions were subdued in the manufacturing export market, with the sub-index moving down below 50 points (i.e. contraction) in May.

Across the manufacturing sub-sectors, four expanded and four contracted in May. Thepetroleum, coal, chemicals and rubber products (51.2 points), non-metallic minerals (50.9 points), and smaller wood and paper products (55.8 points) sub-sectors all expanded (three month moving averages). The textile, clothing and other goods sub-sector expanded for the first time since September 2012 (52.6 points). In contrast, the very large food and beverages sub-sector contracted for the first time since February 2013 (49.3 points). The large metal products and machinery and equipment sub-sectors continued to contract in May.

Full report here.