▪ The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI® ) fell 5.6 points in September to 54.2 points (seasonally adjusted), indicating a deceleration in growth after August’s spike to a recent high of 59.8 points. Results above 50 points indicate expansion with higher results indicating a stronger expansion.
▪ September marked a twelfth consecutive month of expansion for the Australian PMI® and the longest run of expansion since 2007 in the seasonally adjusted series. In trend terms, growth is continuing but looks to have decelerated through the September quarter.
▪ The Australian PMI® is currently leading the ABS manufacturing output data by about three months. The latest ABS estimate of manufacturing output volumes indicated growth of 1.8% q/q in the June quarter of 2017, the strongest quarter of growth since June 2011. The latest results from the Australian PMI® indicate another quarter of growth in ABS output volumes is likely in September 2017, but probably at a slower pace than in June.
▪ All seven activity sub-indexes in the Australian PMI® expanded or were stable in September (seasonally adjusted). Exports recovered (rising to 51.2 points) after a mild contraction in August (49.3 points). All others expanded but at slower rate than in August.
▪ All eight sub-sectors in the Australian PMI® expanded in September (trend). Non-metallic mineral products (75.5 points) hit a new record high, reflecting the strength of demand for building-related products. Other large sub-sectors grew at a decelerating pace this month.
▪ Positive sources of local demand for manufacturers in September included apartment and infrastructure construction; mining and agricultural equipment; renewables and utilities. A longer colder winter reportedly contributed to increased demand for heating equipment. Respondents also reported a rare spike in exports of construction-related products for emergency relief and reconstruction in the US following recent hurricane damage. Last orders are now under way for suppliers of components to Australian automotive assembly.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
