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Australian PMI®: Manufacturing continues expansion in June

July 5, 2016 • News

The Australian PMI increased by 0.8 to 51.8 in June to complete a full year of continuous expansion, equalling the longest unbroken period of growth in a decade.

Image credit: www.FreeDigitalPhotos.net by Stuart Miles

Image credit: www.FreeDigitalPhotos.net
by Stuart Miles

According to Ai Group’s report, five of the seven activity sub-indexes expanded in June, with production up by 3.5 points to 54.4, new orders up by 1.9 points to 54.1) and sales down by 2.2 points to 53.7.

Six of the eight manufacturing sub-sectors expanded, led by petroleum & chemical products (up 2.2 points to 62.1) and non-metallic mineral products (up 6.8 points to 58.3).

Wood & paper products (down 10.0 points to 57.7) and food, beverages & tobacco (down 11.6 points to 53.7) lost some ground in June, but remained in expansion.

While metal products (up 6.4 points to 50.4) and printing & recorded media (up 0.5 points to 50.2) entered into expansionary territory, machinery & equipment (down 5.8 points to 44.8) and textiles, clothing & other manufacturing (up 1.8 points to 48.9) remained in contraction in June.

The input prices sub-index increased by 0.6 points and now stands at 63.8, whereas wages growth continues to be volatile, with the wages sub-index dropping 5.8 points to 55.5.

The manufacturing selling prices sub-index also climbed by 2.4 points to 53.0 – the strongest result since March 2011.

“The mild expansion of manufacturing in June capped a year in positive territory for the Australian PMI®. It was a year in which manufacturers took advantage of the boost to competitiveness from the lower Australian dollar both in the domestic market and in export markets,” said Ai Group Chief Executive, Innes Willox.

“The metal products sub-sector, which has been heavily impacted by adverse global conditions in recent times, recorded its first expansion since September 2010. The important food and beverages sub-sector continued in positive territory although there are now signs of a slowdown and the machinery and equipment sub sector was weaker – in part due to the low levels of business investment across the economy and the gradual wind-down of auto assembly. The clear imperative for the sector is for a lift in investment both within the sector itself and more broadly across the economy.”

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