by Chris Becker
The latest manufacturing PMI was released this morning and it shows a mild recovery underway in the sector, although the AIG note that the downturn in housing construction is hurting conditions. Quelle surprise.
More here:
The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) recovered by a further 1.5 points to 54.0 points in February 2019 (seasonally adjusted). Results above 50 points indicate expansion with higher results indicating a stronger expansion.
This was the best monthly result since October 2018. It signals a better month of recovery in February 2019, following an unseasonably slow summer, with weak growth in January and two flat months in November and December 2018.
The Australian PMI has been stable or positive (50 points or higher) since August 2016 (30 consecutive months), but its trend has suggested slowing growth rates since its recent peak in March 2018. Conditions appear to be diverging in 2019, across the larger manufacturing sectors and their main locations. Three of the six sectors in the Australian PMI® expanded in February, one was stable and two contracted (trend). Positive conditions in February stemmed from export orders, infrastructure, government contracts, defence and mining projects.
Main concerns are:
The downturn in housing construction is crimping demand in building-related manufacturing sectors. Ongoing drought is detracting from trading conditions for manufacturers in NSW, South Australia and parts of Queensland. A small number of respondents in NSW are concerned that impending Federal and state elections are dampening consumer confidence and hence their forward orders. Businesses in all states remain very concerned about mitigating their energy costs and about growing skill shortages for experienced, technical and specialist tasks.
If only there was some sort of policy that could mitigate energy costs for producers?