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Australian PMIĀ®: Manufacturing surges ahead in August

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).

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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," Mr 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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Seasonally adjusted

Index this month

Change from last month

12 month average

 

Index this month

Change from last month

12 month average

Australian PMI®

59.8

+3.8

55.2

Exports

49.3

-4.6

55.1

Production

61.4

+2.4

56.4

Sales

50.9

-4.9

55.6

New Orders

64.3

+8.5

58.3

Input Prices

62.9

-6.4

65.1

Employment

56.4

-1.0

52.3

Selling Prices

53.7

+3.7

51.9

Inventories (stocks)

58.9

9.9

50.3

Average Wages

59.0

+3.3

58.6

Supplier Deliveries

52.9

-1.1

54.4

Cap. Utilisation (%)

77.0

+0.7

76.0

* All sub-sector indexes in the Australian PMI® are reported in trend terms (Henderson 13-month filter), so as to better identify the trends in these volatile monthly data.

Background: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) is a seasonally adjusted national composite index based on the diffusion indices for production, new orders, deliveries, inventories and employment with varying weights.  An Australian PMI® reading above 50 points indicates that manufacturing is generally expanding; below 50, that it is declining.  The distance from 50 is indicative of the strength of the expansion or decline.  Australian PMI® results are based on responses from around 200 companies from a rotating sample of manufacturers. The manufacturing sub-sector categories in the PMI match the ANZSIC industry classifications for manufacturing and are weighted, based on 2011-12 industry output data from the ABS.

Media Enquiries: Tony Melville – 0419 190 347