Australia’s manufacturing sector gathers further pace in March, according to report

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The Australian manufacturing sector has racked up a sixth consecutive month of strong recovery, having increased by a further 1.1 points to 59.9 in March.

According to a report from the Australian Industry Group (Ai Group), all seven activity indices in the Australian Performance of Manufacturing Index (Australian PMI)expanded in March, with the new orders index (up 3.6 points to 63.5) suggesting further strong production in the coming months.

What’s more, all six manufacturing sectors in the Australian PMI reported positive trading conditions, with especially buoyant conditions in the machinery & equipment (up 0.6 points to 65.0) and textiles, clothing, footwear, paper & printing products (up 3.5 points to 66.1) sectors.

Commenting on the results of the latest survey, Ai Group Chief Executive Innes Willox said the strong recovery in Australian manufacturing was down to growth across the full range of sectors.

“Production and sales continued to expand despite pulling back from very rapid rates of growth in February,” Mr Willox said.

“Employment growth surged with manufacturers’ confidence boosted by buoyant levels of new orders.

“The machinery & equipment sector benefitted from higher demand from across the industrial, mining and agricultural sectors while the metal products and building equipment sectors supplied into healthy levels of residential construction and infrastructure activity.”

The survey also found that the input prices index eased a little in March (down 2.8 points to 71.3) but remained above its long-run average (67.5 points).

The selling prices index jumped to its highest level since 2008 (up 8.5 points to 59.7) indicating that, on average, selling prices rose sharply in March and many manufacturers are passing on their elevated input costs.

“Some growing pains are evident with deliveries of inputs not keeping up with sales of finished products and with reports of skill shortages becoming more widespread,” Mr Willox continued.

“The challenge over the next couple of months will be to maintain momentum as fiscal support is wound back further and while COVID-19 remains a threat.”

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