Australian industries see easing in supply chain pressures in August— Ai Group

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Supply chain pressures continue to ease for Australia’s industrial sectors, with the Ai Group Industry Index posting an increase of 3.1 points in August to -11.6. 

According to the Ai Group, input prices eased in August while input volumes grew into expansionary levels not seen since mid-2021, indicating an easing in supply chain pressures. 

The latest report marks the index’s 16th month in the negative territory. 

“Supply chain pressures have been easing throughout 2023, and these positive developments suggest we are getting close to a return to normal. Improved supply arrangements also show up in the welcome further easing of price pressures,” said Innes Willox, CEO of Ai Group

The employment, industrial activity, and new orders indicators all continued to exhibit contractionary conditions, with all the industries in the survey, including manufacturing, construction, and business services. 

Meanwhile, price indexes all declined in August, after a moderated but still persistent inflation. The indicator’s latest reading is the lowest since the peak of the pandemic in mid-2020. 

The Australian manufacturing PMI grew by 5.8 points to -19.8, but remains in contraction, while the construction PCI declined slightly by 0.7 points. It also remained in the negatives at -9.9. 

Survey respondents said they continue to experience difficulties filling positions and obtaining reliable overseas suppliers.

August also continued to be a weak ordering month for upstream firms, who also reported an inability to recruit new workers due to higher wage rates. 

Meanwhile, food and beverage companies reported increased competition as the market experienced slower growth rates dragged by low customer demands. 

“While these are positive signs, we are far from being out of the woods: businesses from across a wide range of industries are reporting falling activity, employment and new orders as they brace for the further impacts of higher interest rates on consumers and businesses,” Willox said.