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Australian PMI®: Manufacturing forges ahead in February

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) has increased by 8.1 points to 59.3 in February, recording a fifth consecutive month of expansion and its strongest result since May 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: "With manufacturing production, employment, sales and exports all growing at a healthy pace, the Australian PMI® rose to its highest level in nearly fifteen years in February. The period since 2002 has been particularly difficult for Australia’s manufacturers in the face of the phenomenal expansion of China’s manufacturing sector, extended periods of domestic currency strength and volatility in global confidence, activity and trade. So it’s great that Australia is making again.

"The surge in February builds on a recovery from the sluggish performance in the third quarter of last year and marks a fifth month of expansion. However, substantial challenges remain with further growth constrained by the lack of business investment in recent years and renewed fears about energy security and energy prices now top-of-mind particularly for our more energy-intensive manufacturers,” Mr Willox said.  

Australian PMI®: Key Findings for February:

  • Six of the seven sub-indexes in the Australian PMI® expanded in February (see table below), with strong growth in new orders (up 6.9 points to 60.6) and sales (up 7.7 points to 55.3) providing an encouraging outlook. Production jumped from stable conditions in January to strong expansion (up 15.4 points to 65.3), as did employment (up 7.9 points to 57.5).
  • Seven of the eight manufacturing sub-sectors improved in February (trend*), with machinery & equipment (up 1.4 points to 60.1), non-metallic mineral products (up 2.8 points to 66.3) and food and beverages (up 1.8 points to 58.8) all building on expansions in January. Only the very small printing & recorded media sub-sector remained in the doldrums (unchanged at 45.1).
  • The input prices sub-index fell by 11.1 points in February to 61.2, easing back from extremely high levels in January. While the selling prices sub-index inched higher (up 1.6 points to 53.7), growth in input costs and wages (down 4.2 points to 58.8) continues to outpace selling prices.

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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®

59.3

+8.1

53.2

Exports

57.0

+2.9

55.0

Production

65.3

+15.4

53.9

Sales

55.3

+7.7

54.4

New Orders

60.6

+6.9

55.6

Input Prices

61.2

-11.1

62.6

Employment

57.5

+7.9

49.8

Selling Prices

53.7

+1.6

50.4

Inventories (stocks)

48.3

-7.7

50.8

Average Wages

58.8

-4.2

58.1

Supplier Deliveries

56.3

+9.3

53.2

Cap. Utilisation (%)

76.9

+3.1

74.1

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