Australia’s manufacturing sector expands in July

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Australia’s manufacturing sector has expanded for the tenth consecutive month in July, with the latest Performance of Manufacturing Index (PMI) from the Ai Group rising one point to 56.0 during the month.

Ai Group’s key findings for July showed that six of the seven activity sub-indexes in the Australian PMI expanded in July with new orders (down 3.7 points to 55.8) and sales (down 5.1 points to 55.8) continuing to expand, while employment rose by up 8.4 points and is now back into positive territory at 57.4 points.

According to the report, six of the eight manufacturing sub-sectors posted a strong growth in July, led by non-metallic mineral products (up 1.9 points to 67.3), wood & paper products (up 1.7 points to 67.0) and machinery & equipment (down 0.7 points to 58.0).

The textiles, clothing, furniture & other manufacturing, along with the printing & recorded media sub-sector both fell deeper into contraction, with the former dropping 0.2 points to 34.7 and the latter slumping 4.4 points to 47.9.

The report also found that the input prices sub-index increased a further 4.4 points to 69.3 in July, while wages dropped 4.7 points to 55.7, dipping below its six-month average (58.1 points).

The selling prices sub-index also increased in July, swelling by 2.9 points to a neutral 50.0 in July.

Commenting on the July readings, Ai Group Chief Executive, Innes Willox, said the broadly-based expansion of manufacturing contributed positively to the rebalancing of the broader economy.

“Production, sales, exports and employment all grew during the month, in part thanks to the strength of other key sectors including construction and agriculture, and the recovery of spending in the mining sector,” Mr Willox noted.

“These growth opportunities more than offset the further decline of automotive assembly. They are also, at least for the time being, helping to mitigate the growing threats from unrelenting energy price rises and a higher dollar.”

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