▪ The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI® ) jumped 6.2 points higher to 57.3 points in November (seasonally adjusted). Results above 50 points indicate expansion with higher results indicating a stronger expansion.
▪ November marked a fourteenth month of expanding or stable conditions for the Australian PMI® and the longest run of expansion since 2005. November signaled a stronger pace of growth, after two months of relatively slower growth in September and October (coinciding with the final closure of automotive assembly and a slightly higher Australian dollar in Q3).
▪ The Australian PMI® has now been growing or stable in all but two months (Aug and Sep 2016) since July 2015. Historically, the longest run of continuously positive results in the Australian PMI® was from July 2001 to July 2005 inclusive (50 months).
▪ All seven activity sub-indexes in the Australian PMI® expanded in November. New orders and exports were especially strong in November, which bodes well for growth in 2018.
▪ Five of the eight sub-sectors in the Australian PMI® expanded in November (trend). The very large food and beverages sub-sector strengthened further, but non-metallic minerals weakened, following a strong period of demand for building products earlier in 2017.
▪ Input prices and wages both rose sharply in November, with manufacturers across several sub-sectors noting that soaring energy costs are damaging their profitability.
▪ Participants in in the Australian PMI® said demand from residential construction was tailing off in November. Other participants noted stronger demand for equipment, machinery and other inputs or Government projects and procurement, agriculture, renewable energy projects and the local leisure market (e.g. caravans, trailers and camping equipment).
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.
