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Manufacturing surges ahead in August: Australian PMI®

07 September, 2017

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) jumped by 3.8 points to 59.8 in August – an eleventh consecutive month of expansion for the manufacturing sector and the highest monthly result for the Australian PMI® since 2002.

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 alignment of the stars continued for domestic manufacturing with the Ai Group Australian PMI® indicating a very strong performance in August. Production and employment lifted and new orders grew strongly in a month of broad-based expansion across the sector. A particularly strong showing by the non-metallic mineral products sub-sector reflects its close links with the building and construction industry buoyed by investment in infrastructure, a lift in commercial building and solid levels of activity in residential building. Alongside the weight of good news, the recent lift in the value of the Australian dollar is dampening the outlook for sales growth both in export and the domestic markets. As well, energy prices and the uncertainty around energy policy are inhibiting investment and causing grave concern particularly among the more energy-intensive segments of the industry," Willox said.

Australian PMI®: Key Findings for August:

  • Six of the seven activity sub-indexes in the Australian PMI® expanded in August (see table below) with production (up 2.4 points to 61.4) and new orders (up 8.5 points to 64.3) especially strong.
  • Robust expansion in inventories (up 9.9 points to 58.9) rather than sales (down 4.9 points to 50.9) suggests current activity is geared towards future orders and stockpiling rather than for immediate delivery.
  • Seven of the eight manufacturing sub-sectors expanded in August (trend data*), led by non-metallic mineral products (up 3.5 points to 72.3 – its highest monthly level since this sub-series commenced in 2009) and wood & paper products (up 1.7 points to 71.1). These results reflected local demand from the building industry and from food manufacturing and processing (for packaged products).
  • The input prices sub-index fell 6.4 points to 62.9 but remains elevated, with energy costs of great concern to manufacturers. The recent lift in the dollar is dampening imported input prices but also dampening export sales. Exports paused this month (49.3 points) after growing well for the past year.
  • The selling prices sub-index increased by 2.9 points to 53.7 in August, with some manufacturers commenting that their ability to raise selling prices to cover some of their rising input costs is improving.

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