▪ The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI® ) rose by 4.7 points to 56.7 points, indicating faster growth across the manufacturing sector in August (seasonally adjusted). Results above 50 points indicate expansion with higher results indicating a stronger expansion.
▪ The Australian PMI® has now indicated positive conditions (results above 50 points) for 23 consecutive months, which is the longest run of recovery or expansion since 2005.
▪ All seven activity sub-indexes in the Australian PMI® expanded in August. The exports sub-index has been lower than other activity sub-indexes over the past year, but it jumped 8.5 points to 58.4 points in August. Six of the seven activity sub-indexes accelerated in August, with only the inventories sub-index decelerating.
▪ Five of the eight sub-sectors in the Australian PMI® expanded in August (trend). Food & beverages, wood & paper products, chemicals, non-metallic minerals and machinery and equipment all remained expansionary in August. The small printing and recorded media and ‘textiles, clothing & other manufacturing’ sub-sectors contracted in July. The metal products sub-sector was broadly stable at 49.3 points in August. Recovery in the metals sub-sector has been slowing in recent months, with many respondents reporting slowing demand and stronger offshore competition.
▪ Drought conditions in New South Wales and Queensland are now having an adverse impact on input costs and sales for some manufacturers. Food and beverage manufacturers are reporting disrupted supply and higher prices of raw agricultural inputs, while manufacturers operating in the metals and machinery and equipment sub-sectors who sell to the agricultural sector or its supply chain are reporting reduced sales.
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.
