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Australian PMIĀ®: Manufacturing ends 2017 on a high

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) ended 2017 on a high with a reading of 56.2 in December, down a slight 1.1 on the previous month, and further building on the recovery the sector has experienced over the year (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: "December marked the 15th consecutive month of expanding or stable conditions in the manufacturing sector and adds to the confidence and momentum that has been building over the past year. The healthy Australian PMI® reading of 56.2 is all the more impressive given the headwinds of the closure of auto assembly, high energy prices and growing skills shortages which have marked 2017. Manufacturers will be looking to the new year for the progress on the National Energy Guarantee and other measures to put downward pressure on business costs," Mr Willox said.

Australian PMI®: Key Findings for December:  

  • All seven activity sub-indexes in the Australian PMI® expanded in December (see table below). Production, stocks (inventories) and supplier deliveries expanded at an accelerated pace while new orders, employment, exports and sales all moderated.
  • Six of the eight manufacturing sub-sectors expanded in December (trend data*), led by the very large food & beverages sub-sector which recorded its highest monthly result since April 2016 (63.2 points). While still expanding, the non-metallic mineral products (55.7 points) and machinery & equipment (55.4 points) sub-sectors both recorded their lowest index results for 2017 in December, as did wood & paper products, which slipped 3.5 points to move back into contraction (47.2 points).
  • The input prices sub-index dropped 5.6 points from November's six-year high to 70.8 points in December, while wages also fell from a five-year high, dropping 3.9 points to 60.2. In particular, manufacturers continue to report difficulties accommodating recently elevated energy costs.
  • The selling prices sub-index ticked up by 0.8 points to 53.4 in December, signaling that some manufacturers have been able to pass on these cost increases to their customers.

View all Economic Indicators

Seasonally adjusted

Index this month

Change from last month

12 month average

 

Index this month

Change from last month

12 month average

Australian PMI®

56.2

-1.1 

56.0

Exports

51.4

-6.2

53.3

Production

57.7

1.1

56.9

Sales

52.6

-3.6

54.9

New Orders

56.9

-3.5

58.7

Input Prices

70.8

-5.6

67.4

Employment

52.9

-2.0

53.9

Selling Prices

53.4

0.8

52.4

Inventories (stocks)

55.5

1.1

51.5

Average Wages

60.2

-3.9

59.6

Supplier Deliveries

57.4

0.1

54.5

Cap. Utilisation (%)

79.7

4.8

76.9

* 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