Australia’s manufacturing sector expanded at its fastest pace in nearly three years in August, with stronger demand and a rebound in exports driving higher output, according to the latest S&P Global data.
The seasonally adjusted S&P Global Australia Manufacturing Purchasing Manager’s Index (PMI) rose to 53.0 in August, up from 51.3 in July.
The reading stayed above the neutral 50.0 threshold for the eighth consecutive month, signalling ongoing improvement in operating conditions and marking the sharpest expansion since September 2022.
“Australia’s Manufacturing PMI data showed a further improvement in business conditions at the goods producing sector midway through the third quarter of 2025,” said Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence.
“The rates at which new orders and output rose were both solid and supported by a renewed rise in new export orders during the latest survey period.”
S&P Global reported that new orders increased in August on the back of stronger domestic demand and greater client interest, while export orders returned to growth for the first time since May, though only slightly.
To keep pace with the rise in workloads, manufacturers added both full-time and part-time staff, extending the current streak of job creation to six months.
“Not only has this reflected improving domestic conditions, as interest rates were lowered, but also nascent improvements in external conditions as trade uncertainty somewhat eased with lower-than-expected US tariffs for regional economies,” Pan said.
Manufacturers also raised purchasing activity for the first time since April, with some firms building safety stock amid longer lead times and supply bottlenecks. This contributed to the fastest rise in pre- and post-production inventories in more than three years.
Data found that input cost inflation picked up slightly in August due to higher material and shipping costs, but price pressures remained below historical averages. Firms passed some of these costs onto clients, though overall output price inflation was subdued.
“Overall, the latest data are also pointing to the likelihood of continued output growth in the near term both directly through the uplift of the Future Output Index and indirectly through higher purchasing and hiring activity,” Pan added.
“Price pressures also remained subdued in August despite stronger demand, boding well for further sales growth in the near-term.”
