Australia’s manufacturing sector and broader private sector activity continued to expand in December, though at the slowest pace in seven months, according to Flash Australia PMI data released by S&P Global.
The survey showed that growth in manufacturing output eased alongside services activity, despite continued support from rising new orders.
S&P Global reported that the seasonally adjusted Flash Australia PMI Composite Output Index remained above the 50.0 no-change threshold for a fifteenth consecutive month in December, indicating ongoing expansion in private sector activity.
The index fell to 51.1 from 52.6 in November, which S&P Global said reflected softer growth in both manufacturing output and services activity over the month.
According to S&P Global, higher new business inflows continued to underpin activity, although the pace of new order growth slowed compared with November.
The moderation was mainly driven by slower growth in services new business, while manufacturing export orders rose and helped keep overall new export growth unchanged from the previous month.
S&P Global said Australian firms increased staffing levels in December to manage workloads and in anticipation of stronger future output.
The Future Output Index, as measured by S&P Global, rose to its highest level since June, reflecting improved sentiment among survey respondents, including manufacturers, about output prospects over the next 12 months.
While outstanding workloads declined for an eighth consecutive month overall, S&P Global reported a divergence between sectors, with service-sector backlogs falling again while manufacturing backlogs increased for the first time in eight months.
On prices, S&P Global said input cost inflation intensified across the private sector in December, with manufacturing facing the sharpest increase in goods input costs in eight months.
The survey found that longer supplier delivery times and higher purchasing activity contributed to cost pressures, leading firms to raise output charges. S&P Global noted that manufacturers reported a faster pace of selling price inflation at the end of 2025.
“December’s S&P Global Flash Australia PMI data indicated that business activity remained in expansion in the final month of the year, reflecting continued growth through the fourth quarter of 2025,” said Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence.
“However, the rate of output growth was the softest in seven months, falling below the long-run trend.”
Pan added that while new orders and employment continued to rise, cost pressures became more pronounced.
“Cost pressures meanwhile intensified for Australian businesses, resulting in a quicker rise in average output charges as companies attempted to defend their margins,” she said.
