Manufacturing sector shows slight July recovery

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  • Plant & Equipment

There was good news for Australia’s manufacturing sector in July, with the Australian Performance of Manufacturing Index showing activity recovering 6.2 points to a stable 50.4, mostly on the back of a weak Australian dollar.

Manufacturing sector shows slight July recovery
The wood & paper products sub-sector expanded for a fifth month, up 4.4 points to 68.2 on the Australian Performance of Manufacturing Index.

The Australian PMI index — run by the Australian Industry Group — showed four of the seven activity sub-indexes expanded in July: Manufacturing sales (up 12.9 points to 53.9) expanded for the first time in 14 months, while production (up 10.6 points to 54.2) and supplier deliveries (up 6.3 points to 50.6) reversed sharp declines in June to return to expansion.

Ai Group says new orders (up 7.6 points to 49.8) also recovered lost ground to approach stability, but stock levels (down 1.7 points to 47.9) and manufacturing employment (up 2.6 points to 47.5) remained in negative territory. The exports sub-index expanded for a third consecutive month (up 1.6 points to 51.8), reflecting the lower Australian dollar.

Three of the eight manufacturing sub-sectors expanded in July, led by food, beverages & tobacco (down 1.7 points to 58.9) for a 14th month. The relatively small wood & paper products sub-sector (up 4.4 points to 68.2) expanded for a fifth month, while petroleum, coal, chemical & rubber products (up 2.2 points to 50.7) returned to expansion after a brief contraction in June.

"The lower dollar was an important positive factor in the July turnaround in manufacturing performance, which saw another lift in exports," Ai Group chief executive Innes Willox says.

"Healthy contributions from the food and beverages sector and industry segments linked to residential construction offset continued weakness in other areas including the important machinery and equipment sector."

The latter sector, he says, "is suffering from the drop in demand from mining-related construction and the ongoing wind-down of automotive assembly".

 

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