Aussie manufacturing strengthens again in April

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The Australian manufacturing sector grew for the seventh straight month in April, with the Australian Performance of Manufacturing Index (Australian PMI) climbing 1.7 points to 59.2 – nicely above the neutral reading of 50.

"The strong showing by Australian manufacturing in April consolidates the recovery that has been underway in the industrial sector since August 2015 – notwithstanding a temporary setback in the September quarter of last year," says Innes Willox, chief executive of Australian Industry Group (Ai Group), which compiles the report.

"While not a new record, the April result means that since February (59.3 points) we have had the two highest PMI readings since May 2002 (PMI 62.0)."

 Willox says the April performance featured strong growth in exports and local sales of food and beverages manufacturing, building materials, specialist machinery and equipment and specialist chemicals.

"Resurgent output and prices in our agricultural and mining sectors are having a positive effect on demand for a range of locally produced manufactured equipment," he adds.

"This surge is occurring despite the closure of the automotive assembly sector and recent disruptions in some locations due to Cyclone Debbie."

However the outlook is not smooth, Willox says, with sharp rises in energy costs – and especially gas costs – threatening this growth.

"These increases in energy costs are proving difficult to pass on, threatening margins and the very viability of businesses in some manufacturing sectors," he says.

"Recent announcements on energy policy are welcome steps towards the much-needed comprehensive energy and climate policy framework."

 

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