Australian PMI: Manufacturing stabilises in July
Activity across the Australian manufacturing sector stabilised in July, after contracting in June, with the Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) recovering 6.2 points to 50.4.
Four of the seven activity sub-indexes expanded in July. Manufacturing sales (up 12.9 points to 53.9) expanded for the first time in 14 months, while production (up 10.6 points to 54.2) and supplier deliveries (up 6.3 points to 50.6) reversed sharp declines in June to return to expansion.
New orders (up 7.6 points to 49.8) also recovered lost ground to approach stability, but stock levels (down 1.7 points to 47.9) and manufacturing employment (up 2.6 points to 47.5) remained in negative territory. The exports sub-index expanded for a third consecutive month (up 1.6 points to 51.8), reflecting the lower Australian dollar.
Three of the eight manufacturing sub-sectors expanded in July, led by food, beverages and tobacco (down 1.7 points to 58.9) for a 14th month. The relatively small wood and paper products sub-sector (up 4.4 points to 68.2) expanded for a fifth month, while petroleum, coal, chemical and rubber products (up 2.2 points to 50.7) returned to expansion after a brief contraction in June.
Ai Group Chief Executive, Innes Willox, said: "The lower dollar was an important positive factor in the July turnaround in manufacturing performance which saw another lift in exports. Healthy contributions from the food and beverages sector and industry segments linked to residential construction offset continued weakness in other areas including the important machinery and equipment sector.
"Machinery and equipment is suffering from the drop in demand from mining-related construction and the ongoing wind-down of automotive assembly."
Australian PMI®: Key findings for July:
- The Australian PMI® stabilised in July, climbing 6.2 points to 50.4 after dropping 8.1 points in June.
- Three of the eight manufacturing sub-sectors expanded in June: food, beverages and tobacco (down 1.7 points to 58.9); wood and paper products (up 4.4 points to 68.2); and petroleum, coal, chemical and rubber products (up 2.2 points to 50.7). Printing and recorded media was stable at 50.0 points after four months of expansion.
- Textiles, clothing and furniture (down 3.2 points to 49.3) returned to contraction after a brief expansion in June. The machinery and equipment (down 0.6 points to 40.5), metal products (up 3.3 points to 43.0), and non-metallic mineral products (down 2.5 points to 44.0) sub-sectors continued to contract.
- After only the manufacturing exports sub-index managed to stay marginally above 50 points in June, four of the seven activity sub-indexes expanded in July: Manufacturing sales (up 12.9 points to 53.9) expanded for the first time in 14 months, while production (up 10.6 points to 54.2) and supplier deliveries (up 6.3 points to 50.6) reversed June’s sharp declines to return to expansion. New orders (up 7.6 points to 49.8) stabilised, while the exports sub-index remained in positive territory (up 1.6 points to 51.8).
- Despite the recovery in sales and supplier deliveries, manufacturing stock levels (down 1.7 points to 47.9) reduced for a sixth consecutive month, while manufacturing employment (up 2.6 points to 47.5) also remained in contraction.
- The input prices sub-index was unchanged in July (up 0.2 points to 63.1), while the wages sub-index rose by 7.4 points to 64.5, reflecting the 2.5 per cent increase in the national minimum wage and award wage rates from July 1. Manufacturing selling prices rose 4.9 points to 52.3 after three months of contraction, making only a small inroad into the intense downward pricing pressures of weak local demand.
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