Manufacturing sector ends 2015 in expansion

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  • Plant & Equipment

The Australian manufacturing sector ended 2015 positively, remaining in expansion for a sixth straight month in December despite the Australian Performance of Manufacturing Index showing a slight 0.6-point decline.

Manufacturing sector ends 2015 in expansion
Printing & recorded media expanded 3.3 points to 50.9 in December.

The Australian Industry Group’s Australian PMI index ended the year on 51.9, which is above the 50-point level separating expansion from contraction. This result, the body says, continued the longest run of expansionary readings since 2010.

"The further expansion of Australian manufacturing in December capped a strong second half of 2015," Ai Group CEO Innes Willox says. "After the extended weakness the sector has experienced over the past five years, this is a most welcome turnaround.

"With export growth solid and production, sales and new orders all on the rise, there is now a very good base from which manufacturers can launch a prosperous 2016," he adds.

"That said, declines in automotive assembly, the ongoing contraction of mining investment and tough conditions in global metals markets continue to constrain the growth of the sector and its role in rebalancing the Australian economy."

Five of the eight manufacturing sub-sectors sat in above-50 expansion territory, but only one posted growth: printing & recorded media (up 3.3 points to 50.9).

The others were: wood & paper products (down 2.9 points to 64.3); petroleum, coal, chemical & rubber products (down 2.2 points to 55.2); non-metallic mineral products (down 3.8 points to 54.2); and food & beverages (down 0.6 points to 51.8).

Machinery and equipment grew 4.1 points but remained in contraction territory at 47.2. Also contracting were metal products (down 0.4 points to 48.6), and textiles, clothing, footwear, furniture & other (down 2.7 points to 49.3).

On the activity side, new orders were up 2.1 points to 55.3 and exports were down 1.5 points to 54.9) — which Ai Group says "were strongly positive, which augurs well for further expansion in 2016".

The manufacturing selling prices sub-index climbed 3.6 points to 52.2, which the group says signalled a mild increase in selling prices for the first time since July, adding: "Manufacturers continue to face strong competition and intense pressure on margins from more expensive inputs and subdued but persistent wage pressures."

 

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