Australia’s manufacturing sector extends unbroken expansionary run to nine months

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Australia’s manufacturing sector has expanded for the ninth consecutive month in June, with the Ai Group’s performance of manufacturing index (PMI) posting a 0.2 increase compared to the 54.8 level of May.

According to Ai Group’s report, five of the seven activity sub-indexes in the Australian PMI expanded in June, with new orders going up 1.4 points to 59.5 and sales surging to 60.9, up 6.5 points on the May reading.

As was the case in the past two months, seven of the eight manufacturing sub-sectors expanded strongly in June (exceeding 54 points), with the textiles, clothing, furniture & other manufacturing sub-sector the only one to remain in contractionary territory having slipped a further 4.7 points to an historic low of 29.2.

The survey also found that the input prices sub-index increased by 1.1 points to 64.9 in June, while wages dropped a point but remained elevated at 60.4 points.

The selling prices sub-index ended a rare five months of price increases and added further pressure to manufacturers’ margins, having plummeted 9.1 points to 47.1 in June.

Ai Group Chief Executive, Innes Willox, said the manufacturing sector closed the financial year by extending its unbroken expansionary run to nine months.

“Sales, exports and production all lifted and growth was widespread across the sector. Higher activity in the metal products; machinery & equipment; petroleum, coal, chemical & rubber products; and non-metallic mineral products sub-sectors augmented the further growth of the large food & beverages sub-sector,” he said.

“While a lift in new orders indicates that momentum may continue in the near-term, concerns about the impacts of further rises in energy prices are accumulating like storm clouds over the sector and particularly for more energy-intensive industries. With policy uncertainties inhibiting investment in energy and in energy-using sectors, it is imperative that sensible and bipartisan resolution be reached as soon as possible.”

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