Aussie manufacturing industry expands in May


An increase in manufacturing exports has boosted activity across the manufacturing industry in Australia which recorded an expansion for the first time in six months.

Picture:  FreeDigitalPhotos.Net User: happykanppy
Picture: FreeDigitalPhotos.Net User: happykanppy

The boost in exports was driven by the lower Australian dollar, Australia’s peak industry association Ai Group reports. The Australian Industry Group’s Performance of Manufacturing Index (PMI) rose 4.3 points to 52.3 in May.

“The flow of benefits for domestic producers from the lower Australian dollar is picking up as exports recover some of the ground lost in recent years. This was a clear positive for performance in May, together with strong residential construction activity and very low interest rates, and helped propel the sector into expansionary territory for the first time in six months. There remains a fine balance however and the rapid decline in mining construction, the progressive closure of automotive assembly and subdued local business investment in machinery and equipment continues to weigh on local demand,” said Ai Group Chief Executive, Innes Willox.

Five of the eight manufacturing sub-sectors expanded in May: food, beverages & tobacco (up 4.6 points to 59.8); non-metallic mineral products (down 4.3 points to 50.2); printing & recorded media (up 0.7 points to 62.2); wood & paper products (up 4.0 points to 59.3).

The petroleum, coal, chemicals and rubber products sub-sector’s index increased for a third month, up by 12.4 points to 51.8 points in May, while the large metal products sub-sector’s index decreased by 2.0 points to 40.4 points.

The textiles, clothing, footwear, furniture and other manufacturing sub-sector contracted for a third month in May after four months of expansion.

“Five of the seven activity sub-indexes were above 50 points in May, with the strong lift in manufacturing exports (up 10.9 points to 58.3) primarily reflecting the benefits of the lower Australian dollar, particularly in the food and beverages sub-sector. The new orders (up 5.4 points to 52.8) and production (up 3.6 points to 52.9) sub-indexes both ended lengthy periods of contraction, but manufacturing sales declined for a 12th month (up 3.2 points to 47.9), signalling ongoing weakness in local demand,” reads Ai Group’s media release.

The dollar fell by 2.59 cents, or 3.3 per cent over May.

Click here for the full PMI report.