Australia’s manufacturing sector continued to expand in February and at the fastest pace in 15 years, according to the latest survey from the Australian Industry Group.
According to Ai Group’s report, the Australian manufacturing purchasing managers index (PMI) increased by 8.1 points to 59.3 in February, recording a fifth consecutive month of expansion and its strongest result since May 2002.
The findings reveal that six of the seven sub-indexes in the Australian PMI expanded in February, with new orders (up 6.9 points to 60.6) and sales (up 7.7 points to 55.3) registering a particularly strong growth. Production also recorded strong expansion (up 15.4 points to 65.3), as did employment (up 7.9 points to 57.5).
The report showed that seven of the eight manufacturing sub-sectors improved in February, with machinery & equipment (up 1.4 points to 60.1), non-metallic mineral products (up 2.8 points to 66.3) and food and beverages (up 1.8 points to 58.8) all building on expansions in January. The small printing & recorded media sub-sector was the only one that remained in contraction and stagnated at unchanged at 45.1.
The survey also found that input prices sub-index fell by 11.1 points in February to 61.2, while the selling prices sub-index went up 1.6 points to 53.7. According to the report, growth in input costs and wages (down 4.2 points to 58.8) continues to ‘outpace selling prices’.
Commenting on the findings, Ai Group Chief Executive, Innes Willox, said:
“With manufacturing production, employment, sales and exports all growing at a healthy pace, the Australian PMI rose to its highest level in nearly fifteen years in February. The period since 2002 has been particularly difficult for Australia’s manufacturers in the face of the phenomenal expansion of China’s manufacturing sector, extended periods of domestic currency strength and volatility in global confidence, activity and trade. So it’s great that Australia is making again,” Mr Willox added.
“The surge in February builds on a recovery from the sluggish performance in the third quarter of last year and marks a fifth month of expansion. However, substantial challenges remain with further growth constrained by the lack of business investment in recent years and renewed fears about energy security and energy prices now top-of-mind particularly for our more energy-intensive manufacturers.”