Australian manufacturing’s hot streak continues

The country’s manufacturing industry is enjoying its longest period of expansion since 2006, according to the Australian Industry Group’s PMI result, released this morning.

Following January’s overall PMI of 51.5, today’s figures showed a result of 53.5, which is also the biggest monthly expansion since July 2010.

Any result above 50 indicates expansion. The further above 50, the greater the growth result. February’s overall result represented the eight straight months of growth.

The Ai Group’s chief executive, Innes Willox, said that the sector had enjoyed a running start to the year, and confidence was building in the expectation that the Australian dollar would stay around its current level.

“Production, sales, new orders and exports all lifted in February to consolidate the gains made by manufacturers over the second half of 2015,” said Willox in a statement.

“There is little doubt that greater competitiveness in export markets and in the domestic market due to the lower dollar is central to this turnaround.”

The result was overall positive, but there were some areas of concern, said Willox.

“Important sub-sectors, including the metal products sub-sector, remain in contraction as does the large machinery & equipment sub-sector despite improving trends in recent months,” he added.

“Many businesses are being adversely impacted by the higher costs of imported inputs associated with the lower dollar.”

Notable activity sub-indices included production’s result of 60.1 (its best result since 2004), new orders stayed positive at 52.4 (down from 52.8) and sales returning to expansion (53.0 points).

Food and beverage leads the way in January’s improved PMI result

The first month of the year has seen a boost for Australia’s manufacturing sector, helped by the dollar’s depreciation, but it remains in contraction overall.

The Australian Industry Group PMI recorded an overall improvement of 2.1 points on December’s result to be at 49.0 in January.

Any result over 50 indicates growth, and below it contraction.

Three of seven sub-indices were above 50: exports were up 3.0 points to 54.0, supplier deliveries up 4.3 to 57.9, and stock levels 6.0 to 41.4.

By sub-sector, three of eight categories were in growth, with Food, Beverage & Tobacco leading the way (up 2.5 points to 62.9. Textiles, Clothing and Furniture, and Non-Metallic Mineral Products were both also in expansion.

The Ai Group’s chief executive Innes Willox said there were signs that the dollar, which fell as low as US 77.22 cents last week, would provide a “major fillip” to the industry.

However, it was a mixed blessing overall, and the environment remained challenging.

“This adverse impact of the lower dollar, together with the loss of sales from the sharp drop in mining investment, the wind down of auto assembly in Australia and generally weak business investment indicate that the headwinds facing the sector will continue well into 2015,” he said.


Australian industry sees weak finish to 2014

Australia’s manufacturing sector ended the year in contraction, according to the Australian Industry Group’s monthly Performance of Manufacturing Index survey.

The Ai Group’s PMI was down 3.2 points overall for the month to 46.9, meaning it slipped back into negative territory after November’s marginally expansionary result.

Any result under 50 in the PMI indicates contraction, and above it, expansion.

“We would have hoped to have seen a stronger Australian PMI in the lead-up to Christmas, but the finding is consistent with other publicly released data,” said the AiG’s chief executive, Innes Willox.

As with November, four of the eight sub-sectors tracked were in growth territory, led by Food, Beverages and Tobacco, which recorded a result of 60.4 (up 1.3 points).

Despite a falling dollar, which meanwhile hit a five-and-a-half-year low this morning, conditions remained difficult for the industry for a number of reasons. These included tight margins, with the input costs sub-index up to 70.3.

“Respondents to the Australian PMI welcomed the further depreciation in the Australian dollar, but noted that the level of the dollar continues to encourage strong import competition,” said Willox.

“Business sentiment and appetite for investment remain weak. The closure of Australian automotive assembly facilities now under way, plus the rapid decline in mining investment activity, are also weighing heavily on demand for locally made machinery inputs and components.”