The December AIG PMI is out and while above the 50 “expansion” reading for the sixth month in a row, its dipped slightly, at 51.9 points.
This is the biggest expansion since mid 2010 for the manufacturing sector – or whats left of it since then as the too high Australian dollar ravaged the industry.
Input prices are falling on the back of lower energy prices, while wages go nowhere – its all about higher sale prices, due to the lower Aussie dollar (but look how gutted that was during the parity period):
Machinery and equipment still contracting even as the peak of the mining construction boom passes and the housing construction boom gains momentum:
Apart from seasonality skewing to the upside, the highlight was new orders rose 2.1 to 55.3 with exports also adding significantly even as the Aussie dollar puts on a few cents from a low base.
From AIG’s Innes Willox:
The further expansion of Australian manufacturing in December capped a strong second half of 2015. After the extended weakness the sector has experienced over the past five years, this is a most welcome turnaround. With export growth solid and production, sales and new orders all on the rise, there is now a very good base from which manufacturers can launch a prosperous 2016.
That said, declines in automotive assembly, the ongoing contraction of mining investment and tough conditions in global metals markets continue to constrain the growth of the sector and its role in rebalancing the Australian economy.
Yep. No automotive sector in another 12 months will gut what’s left of traditional manufacturing goods, and the inept handling of the still too high Aussie dollar by the RBA – resting on its laurels after blowing up a GDP and employment accretive housing bubble – and the mining construction boom ending mean this result is nothing to write home about.