Australia’s manufacturing sector continued to expand in December, marking a second consecutive month of modest improvement in manufacturing conditions, according to the latest S&P Global Australia Manufacturing PMI data.
The headline seasonally adjusted Manufacturing PMI registered 51.6 in December, unchanged from November and remaining above the neutral 50.0 threshold that separates expansion from contraction.
The reading indicated that manufacturing conditions improved at a steady, though subdued, pace toward the end of 2025, supported by increases in new orders and output.
S&P Global said manufacturing production rose for a second straight month, alongside higher inflows of new work. However, growth in both areas eased compared with November, reflecting mixed demand conditions.
While domestic demand improved, respondents reported that softer market conditions, heightened competition and weaker overseas demand constrained overall growth. New export orders declined slightly for a fourth consecutive month, largely due to budget pressures faced by international clients.
“December’s Australian Manufacturing PMI data indicated that business conditions in the goods producing sector continued to improve at the end of 2025,” said Jingyi Pan, economics associate director at S&P Global Market Intelligence. “This was again driven by better domestic demand as external sales remained subdued in December.”
Despite the slower pace of expansion, rising new orders and production requirements contributed to increased hiring and purchasing activity.
S&P Global noted that employment rose at the fastest rate in nine months, supported by improved availability of candidates, while the expansion in workforce capacity led to a further reduction in outstanding workloads.
“Although the rates of new order and output growth both slowed at the end of the fourth quarter, it was positive to see a higher level of business confidence and upticks in both hiring and purchasing activity,” Pan said, adding that this reflected “positive expectations for higher output in the coming year.”
Input purchasing increased in response to higher production needs, though overall stocks of purchases edged lower for a third month.
At the same time, supply conditions deteriorated more sharply, with supplier delivery times lengthening at the fastest pace since November 2024 due to shortages and delivery delays. This contributed to rising input costs, driven by higher material and shipping expenses.
“Supply conditions continued to worsen, which is a trend worth monitoring,” Pan said. “Suppliers’ delivery times lengthened at the sharpest pace in just over a year in December, contributing to an intensification of cost pressures, though rates of inflation remain below respective historical averages.”
