The Australian Industry Group Australian PMI® increased by 1.1 points to 50.9 in October, signaling a very mild expansion across the manufacturing sector.
According to Ai Group’s report, the mild expansion was driven by stronger growth in exports (up 6.0 points to 56.0), sales (up 3.6 points to 55.0) and new orders (up 6.4 points to 54.7).
Three of the eight manufacturing sub-sectors expanded in October, including printing & recorded media (down 6.0 points to 56.8), machinery & equipment (up 1.3 points to 54.1), and petroleum & chemical products (up 2.7 points to 55.4).
The food and beverages sub-sector recorded a drop of 2.4 points but remained in expansion and now stands at 50.4.
The metal products sub-sector slipped into contraction (down 4.1 points to 47.2), while textiles & other goods (down 7.9 points to 32.5), wood & paper products (down 9.8 points to 38.8) and non-metallic minerals (down 0.7 points to 45.3 points) all moved further under the 50 mark which separates contraction from expansion.
The selling prices sub-index also slipped back into contraction in October (down 4.4 points to 47.9) despite input prices (up 6.3 points to 66.3) and wages (up 2.1 points to 59.0) adding further to cost pressures.
“The lift of the Australian PMI® into growth territory, while only by the narrowest of margins, is nevertheless positive news after the inventory-related adjustment of a couple of months ago,” said Ai Group Chief Executive, Innes Willox.
“Stronger exports, domestic sales and new orders in October are encouraging although growth remains relatively narrowly based, with contractions in the important metal products and non-metallic minerals sub-sectors broadly offsetting expansions in the machinery & equipment and petroleum & chemicals sub-sectors while the largest manufacturing sub-sector – food & beverages – trod water in October. The manufacturing sector would welcome the boost to investment that a reduction in the company tax rate would provide – even if it was limited to businesses with annual turnovers of less than $50 million.”