Aussie manufacturing continues bull run

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  • Plant & Equipment

The Australian manufacturing industry grew strongly in November, marking its longest run of expansion since 2005.


The Castlemaine-Perkins XXXX brewery in Brisbane
The Castlemaine-Perkins XXXX brewery in Brisbane

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) ended the month 6.2 points up to finish at 57.3. (Readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase.)

Ai Group chief executive Innes Willox says this was the index’s 14th consecutive month of expanding or stable conditions, building on an uninterrupted growth phase that began in October 2016.

"Sales, production and employment all jumped ahead in November and the strong rise in new orders points to further good news as we head to Christmas," he says. "The resumption of growth in exports is particularly encouraging after a slight easing in momentum in recent months.

"The period of steady employment growth for the sector was reflected in a lift in the pace of wage growth to its highest rate in over five years."

However, Willox says the sharp rise in input costs recorded in November "is a sobering reminder of the risks posed for the manufacturing sector by climbing energy costs".

These are the Australian PMI’s key findings for November:

  • All seven activity sub-indexes in the Australian PMI improved and all indicated expansion in the month. New orders (up 5.3 points to 60.4 points) and exports (up 8.9 points to 57.6 points) were especially strong, which bodes well for growth in 2018.
  • Five of the eight manufacturing sub-sectors expanded in November, led by the very large food & beverages sub-sector (up 0.8 points to 59.7 points, its highest monthly result since April 2016). Non-metallic mineral products (mainly building materials) plunged 10.2 points and into contraction at 41.7 points in November, after expanding strongly through much of 2017.
  • Input prices (up 10.2 points to 76.4 points) and wages (up 5.1 points to 64.1 points) both rose sharply in November, with manufacturers across several sub-sectors noting that soaring energy costs are damaging their profitability.
  • The selling prices sub-index ticked up by 4.0 points to 52.2 in November, signalling that some manufacturers are passing these cost increases on to their customers. This follows strong downward pressure on prices in the previous two months.


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