Oz manufacturing industry on a high

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  • Plant & Equipment

The Australian manufacturing industry continues to grow, with January’s 2.5-point increase marking 16 months of expansion

Australian PMI) increased by 2.5 points to 58.7 in January
Australian PMI increased by 2.5 points to 58.7 in January Photo:  Tempura/E+/Getty Images

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) increased by 2.5 points to 58.7 in January, indicating faster growth than at the end of 2017 (readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase).

Ai Group chief executive Innes Willox was happy with the start to 2018.

"Australia's manufacturing industry enjoyed a strong start to the year and added to the longest manufacturing expansion in more than a decade," he says. "Food and beverage producers led the way, supported by strong showings from businesses in the petroleum, coal and chemicals; metal products; and machinery and equipment sub-sectors.

"While production and sales volumes were robust and employment also grew, the combination of cost pressures – notably energy costs – and strong competition, in part due to the recent rise in the value of the Australian dollar, continued to keep margins tight and restrain wage rises," Willox says.

"Now is the opportunity for policy makers to reinforce the optimistic start to the year to secure further investment and employment gains in 2018," he adds.

There were plenty of key findings for January: 

  • January marked the 16th month of expanding or stable conditions for the Australian PMI – the longest run of expansion since 2005
  • For the third consecutive month, all seven activity sub-indexes in the Australian PMI expanded, with six accelerating their pace of growth
  • Five of the eight manufacturing sub-sectors expanded in January (trend data*), led by the very large food and beverages sub-sector (61.4 points). Large differences in conditions were evident, with the petroleum, coal and chemicals sub-sector recording its highest monthly result in almost a decade (67.9 points) while the textiles and clothing sub-sector recorded its lowest monthly result in a similar timeframe (33.5 points)
  • The input prices (down 1.1 points to 69.7) and wages (down 1.1 points to 59.1) sub-indexes continued to recede from November’s historic highs, while the selling prices sub-index indicated mild price reductions in January (down 4.2 points to 49.2). Manufacturers continue to report difficulties accommodating recently elevated energy costs.

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