▪ The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI® ) climbed 2.3 points to 59.0 points in September (seasonally adjusted), indicating faster growth across the manufacturing sector. Results above 50 points indicate expansion with higher results indicating a stronger expansion.
▪ The Australian PMI® has now indicated two years of uninterrupted expansion (results above 50 points), which is the longest run of growth since 2005.
▪ All seven activity sub-indexes in the Australian PMI® expanded in September (seasonally adjusted). Five activity sub-indexes accelerated with the new orders sub-index reaching a six-month high. Only the deliveries and sales sub-indexes slowed in September.
▪ Five of the eight sub-sectors in the Australian PMI® expanded in September (trend). Expansions were stronger in the food & beverages, non-metallic minerals and wood and paper products sectors. The smaller ‘printing and recorded media’ sub-sector contracted, while the ‘textiles, clothing & other manufacturing’ and the chemical products sub-sector were broadly stable. Recovery in the chemicals sub-sector has been slowing in recent months with many respondents reporting that rising oil prices were putting upward pressure on input costs.
▪ The manufacturing sector has confounded doubters in recent years by lifting employment and production despite the exit of passenger car assembly from Australia. Australia’s manufacturing sector is diverse and comprised of multiple sub-sectors that are continuing to adapt to their operating environment. An improving economy, along with infrastructure, mining, renewable and defence projects continue to support demand for manufacturing products in 2018.
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.
