Australia’s manufacturing post-COVID recovery slows down in May

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The Australian PMI dipped 6.1 points to 52.4 In May, signaling a slower rate of expansion after three months of steady acceleration.

Ai Group’s key findings indicate that the manufacturing post-COVID recovery slowed down in May, posting significantly lower than in recent months.

That said, most subsectors remained in an expansionary phase, with production slipping by 5.4 points to 51.6.

“Most manufacturing activity indicators including production, employment, and new orders remained expansionary, while sales, exports, and supplier deliveries fell into contraction,” reads Ai Group’s report.

Commenting on these readings, Innes Willox, Chief Executive of Ai Group, said labour challenges and supply chain disruptions remain the major structural constraints on manufacturing.

He said federal election uncertainty, poor weather, and labour market issues hampered manufacturing recovery in May, adding that demand from the agriculture and resource sectors contributed to stability.

Manufacturers continue to report supply constraints and labour shortages as the leading sources of concern and they reported still higher input costs and a lift in wages growth in May,” he said.

“There are mixed messages about the immediate outlook with new orders continuing to rise but with many manufacturers expressing concern about the prospects of sharp energy price rises in the months ahead.

“Overall, the pace of growth in the manufacturing sector eased in May fuelled by falls in exports and domestic sales.”

Image credit: https://www.aigroup.com.au/resourcecentre/research-economics/PMI/