Manufacturing enters 2017 on the up: Australian PMI®
The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) increased by 1.2 points to 55.4 in December, finishing 2016 with a solid expansion (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: "Despite a small fall in sector-wide employment in December, manufacturing production, sales, exports, and new orders all grew strongly in the month, providing a running start to the new year. Four of the five larger manufacturing sub-sectors – food & beverages; petroleum, coal, chemicals & rubber products; non-metallic mineral products; and machinery and equipment – saw healthy growth while the metal products sub-sector closed a difficult year in the red. The positive result for producers of machinery & equipment comes despite the steading unwinding of automotive assembly and points to a tentative pick-up in business investment. Early passage of the Government's Enterprise Tax Plan would provide momentum and an important boost to activity," Willox said
Australian PMI®: Key Findings for December:
- Six of the seven sub-indexes in the Australian PMI® improved from November (see table below), headed by a surge in exports (up 12.6 points to 68.5) and strong expansions in new orders (up 1.1 points to 60.6) and sales (up 5.3 points to 58.8).
- Employment slipped in December (down 4.9 points to 47.4), in line with recently weaker jobs growth.
- Five of the eight manufacturing sub-sectors expanded in December (that is, above 50 points in three-month moving averages), with food and beverages (up 0.6 points to 57.1) and petroleum & chemical products (down 0.6 points to 56.5) continuing to perform solidly. Machinery & equipment (up 0.1 points to 55.0) is showing signs of continued resilience, while non-metallic mineral products bounced back to expansionary conditions (up 7.1 points to 57.9).
- Input prices remained elevated in December (up 0.3 points to 62.8) while the selling prices sub-index fell 6.1 points to a contractionary 45.4, indicating a continued tightening of margins for manufacturers heading into 2017.
- The wages sub-index of the Australian PMI® increased significantly (up 8.5 points to 62.3), perhaps heralding an early 2017 pick-up in manufacturing wages growth.