Manufacturing recovers momentum in September  


Australia’s manufacturing sector has recovered from its dip in August driven primarily by increased activity in food and beverage manufacturing.

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The Australian Industry Group’s performance of manufacturing index (PMI) rose by 2.9 points to 49.8 points in September, primarily influenced by the food & beverages sub-sectors which accounted for around 28% of all manufacturing output.

According to Ai Group’s report, three of the seven activity sub-indexes expanded in September, with production (52.6 points), deliveries (56.4 points) and sales (51.4 points) all above the 50-point mark separating expansion from contraction.

Employment (46.7 points) and stocks (44.3 points) contracted again in September and were joined by new orders which slipped to (48.3 points).

Five of the eight manufacturing sub-sectors expanded in September, including printing & recorded media (62.8 points), petroleum & chemical products (52.7 points), metal products (51.3 points), food & beverages (52.8 points) and machinery & equipment (52.8 points).

The report notes that comments from manufacturers in September indicate a steady improvement in demand and exports in some sectors after last month’s slump.

“Variability in the exchange rate and persisting oversupply in some markets is curbing activity,” reads the report.

“Margin pressures appear to be intensifying due to ongoing high input costs (particularly or imported inputs and energy). Lower government orders, the sharp fall-off in mining construction work and the completion of major infrastructure projects (with no imminent replacement projects in the pipeline) and wet weather in some locations has also dampened activity.”