Manufacturing sector grows for second month in August

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  • Plant & Equipment

Employment, new orders and supplier deliveries were the key drivers of the Australian manufacturing sector’s second straight month of expansion in August, according to the Australian Industry Group’s Australian Performance of Manufacturing Index (Australian PMI).

Manufacturing sector grows for second month in August
The textiles, clothing, footwear, furniture & other manufacturing sub-index returned to expansion in August.

The sector grew overall by 1.3 points to 51.7 in August, with any readings above 50 indicating expansion in activity.

On the activity side, manufacturing employment grew 3.7 points to 51.3 and new orders were up 3.0 points to 52.9 — both sub-indexes returning to positive territory after two months in contraction. Supplier deliveries expanded for a second month, up 2.4 points to 53.0.

Although production expanded for a second month, it did so at a slower pace (down 3.0 points to 51.2), Ai Group says.

On the negative side were stock levels, which fell for a seventh consecutive month (up 0.5 points to 48.4), and manufacturing sales, which returned to contraction (down 5.3 points to 48.6) after a brief expansion in July. The three-month expansion in exports (down 7.1 points to 44.8) also came to an end, the group says.

Three of the eight manufacturing sub-sectors expanded, led by food, beverages & tobacco (down 4.7 points to 54.2), for a 15th month. The relatively small wood & paper products sub-sector (up 1.8 points to 70.0) expanded for a sixth month, while textiles, clothing, footwear, furniture & other manufacturing (up 6.0 points to 55.2) returned to expansion after contracting in July.

"A second month of expansion is encouraging for Australian manufacturing," Ai Group CEO Innes Willox says. "It is also positive for the economy overall which requires a broader base of growth as the mining investment boom continues to unwind.

"The expansion indicated by the rise in the Australian PMI in August was driven by greater production, employment and new orders," Willox says.

"Manufacturers are hoping that these positive directions are built upon in coming months and are sufficiently strong to overcome continued headwinds from the reduced orders for materials and equipment from the mining sector and automobile producers."

 

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