Manufacturing remains buoyant in April: Australian PMI®
The Australian PMI® fell 4.8 points to 58.3 in April, indicating a slower – but still buoyant – rate of expansion following March’s record high (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 manufacturing sector extended its broad-based expansionary run in April. Growth was led by the machinery & equipment; metal products; coal, petroleum, chemical & rubber products; and non-metallic mineral product sub-sectors, all of which are enjoying strong demand from high levels of building and construction activity. The largest manufacturing sub-sector – food & beverages – continued its long run of expansion. In a welcome sign, the diverse textiles, clothing, furniture & other products sector built on recent upward momentum. While the Australian PMI® reading of 58.3 indicated a slower pace of expansion than March's record high, domestic sales, production, new orders and employment all built on recent gains. Respondents reported a slight drop in exports in April which warrants monitoring in the months ahead while energy costs and continued uncertainty over energy policy continue to be a major concern for many manufacturers," Willox said.
Australian PMI®: Key Findings for April:
- April 2018 marked a 19th consecutive month of expanding or stable conditions for the Australian PMI® – the longest run of continuous expansion since 2005.
- Five of the seven activity sub-indexes in the Australian PMI® expanded in April, but at a slower pace than in March (see table below). New orders (down 5.0 points to 61.6), production (down 0.1 points to 62.1) and sales (down 1.4 points to 62.5) remained above 60 points, indicating healthy demand and a strong likelihood of further near-term growth.
- Six of the eight manufacturing sub-sectors expanded in April (trend data*), with four sub-sectors reaching record highs in trend terms: petroleum, coal & chemicals (up 0.4 points to 67.6); metal products (up 1.6 points to 63.8); machinery & equipment (up 1.0 point to 61.2); and textiles, clothing & furniture (up 5.6 points to 57.1).
- Capacity utilisation eased from March’s record high (down 1.3 percentage points to 79.9%) but remains high by historical standards, suggesting some manufacturers will need more investment and/or employment in order to meet future growth in demand.
- The input prices (down 6.0 points to 62.5) and wages (down 3.1 points to 60.3) sub-indexes both slowed in April but remain elevated, with the selling prices sub-index rising 5.3 points to 57.5 as some of these cost pressures are passed on to manufacturers’ customer base.
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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