Manufacturing continues positive start to 2018: Australian PMI
The Australian PMI® fell 1.2 points to 57.5 in February, indicating further expansion but at a slightly slower pace than in January (readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase).
Ai Group Chief Executive Innes Willox said: "The broad-based expansion in Australia's manufacturing sector continued in February led by the food & beverage and the petroleum, chemicals & rubber product sub-sectors. Production, employment and exports were all encouragingly strong and the further growth in new orders points to the likelihood that the sector will extend its 17-month unbroken run into autumn. The high level of employment growth in the sector continues to be reinforced by moderate wage outcomes on average. That said, for some producers, skill-shortages are re-emerging as a constraint on growth and are putting pressure on remuneration among a range of highly-skilled occupations. This and high energy costs are keeping a lid on producers' margins," Willox said.
Australian PMI®: Key Findings for February:
- February marked a 17th month of expanding or stable conditions for the Australian PMI® – the longest run of expansion since 2005.
- For the fourth consecutive month all seven activity sub-indexes in the Australian PMI® expanded. Five sub-indexes slowed, however, with only employment (up 5.7 points to 57.8) and exports (up 4.7 points to 56.5) accelerating.
- Six of the eight manufacturing sub-sectors expanded in February (trend data*), with the larger sub-sectors such as metal products (up 1.7 points to 58.3) continuing to see a sustained period of expansion and/or recovery.
- Weaker conditions remain evident in textiles & clothing (an historic low of 33.0 points adding to more than two years of continuous contraction) and printing & recorded media (down 5.3 points to 39.7).
- The input prices sub-index remains elevated but continued to ease back from November’s six-year high (down 1.2 points to 68.5). The wages sub-index fell to its lowest point since July 2017 (down 2.3 points to 56.8), having sat at around 60 points for the majority of 2017.
- The selling prices sub-index increased by 1.4 points to 50.6, indicating broadly stable prices for customers, despite ongoing cost pressures from manufacturing inputs (energy costs in particular).
Background: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) is a national composite index calculated from a weighted mix of the diffusion indices for production, new orders, deliveries, inventories and employment. An Australian PMI® reading above 50 points indicates that manufacturing activity is expanding; below 50, that it is declining. The distance from 50 indicates the strength of expansion or decline. Australian PMI® results are based on responses from a national sample of manufacturers that includes all states and all sub-sectors. The Australian PMI® uses the ANZSIC industry classifications for manufacturing sub-sectors and sub-sector weights derived from ABS industry output data. Seasonally adjusted and trend data are calculated according to ABS methodology. The Australian PMI® commenced in 1992. More information about the history and methodology of the Australian PMI® is available online.
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