Manufacturing is emerging as one of the fastest-growing SME sectors in Australia, with new research from MYOB indicating the sector’s manufacturing performance is outpacing most other small and medium-sized business segments and could gain further momentum following the Federal Budget.
MYOB’s latest Business Monitor, which surveyed more than 1,000 SMEs, found that 30% of manufacturers reported revenue growth over the past year – well above the SME average of 19% – while one-third expect profitability to improve in the year ahead, the highest level of forward confidence outside the finance and insurance sectors.
However, the report also highlighted ongoing manufacturing cost pressures, with 75% of manufacturers reporting cost increases of 10% or more over the past year.
Nearly half said they are facing significant margin pressure, and 57% reported higher utility costs, reflecting the energy-intensive nature of the sector.
MYOB chief executive Paul Robson said the data shows strong underlying momentum in manufacturing but also persistent structural challenges.
“Revenue growth in the SME manufacturing sector is outpacing the broader economy, future confidence is high, and a high proportion of SMEs in the sector are using AI, with a lower resistance to adoption than in almost any other part of the small business economy,” he said.
“However, strong fundamentals don’t insulate businesses from margin squeeze, and that’s the tension manufacturers have been managing. Energy costs, wage pressures and thin margins add challenges to SMEs that want to invest and grow.”
Robson said recent Budget measures, including $1 billion in interest-free loans through the National Reconstruction Fund and initiatives aimed at strengthening domestic gas supply and supply chain resilience, could help ease pressure on manufacturers seeking to invest in equipment and capability.
“The Future Made in Australia agenda and the support measures announced last night speak directly to those pressure points. Interest-free capital, domestic gas reservation and supply chain support are practical interventions that give manufacturers the stability to back themselves,” he said.
“The ingredients for a strong manufacturing recovery are already there. The right policy settings can accelerate what this sector is capable of.”
