The AIG manufacturing PMI is out and don’t blink, we’re above 50:
The internal look OK too:
But a deeper look should reassure policy-makers that their hollowing-out campaign is still on track. Only wood and food are expanding:
The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) moved into positive territory this month, following eight months of contraction between November 2013 and June 2014. The index increased by 1.7 points, to 50.7 points (seasonally adjusted), indicating broadly stable conditions across the manufacturing sector. The threemonth- moving-average also edged higher in July, to 49.6 points, indicating very mild contraction.
Many respondents to the Australian PMI® expressed renewed concern about the stronger Australian dollar, which has increased import competition and lowered demand and selling prices for locally made products again this month. Meanwhile, wages and input costs continued to grow, placing extra pressure on manufacturing businesses’ margins.
Across the eight manufacturing sub-sectors in the Australian PMI®, only the large food and beverages (51.7 points) and the smaller wood and paper products (67.2 points) sub-sectors expanded in July. The metal products, machinery and equipment, and petroleum, coal, chemicals and rubber products sub-sectors continued to contract (i.e. below 50 points).
Four of the five activity sub-indexes were above 50 points in July, but they were only pointing towards a stabilisation or very mild expansion in conditions at best. Both the stocks and sales sub-indexes remained in contraction this month (i.e. below 50 points). More positively for the outlook, the new orders sub-index of the Australian PMI® stayed above 50 points (i.e. expansion) for the third month in July. Conditions deteriorated for manufacturing exports, reflecting the ongoing strength in the Australian dollar, which currently sits at around US$0.94.
Enjoy the moment. Full report here.
