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Australian PMIĀ®: Manufacturing growth consolidates in January

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) has expanded for a fourth consecutive month with a reading of 51.2 points in January, which is down by 4.2 points on December (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: "Conditions for Australia's manufacturers remained positive in January despite easing from December's end-of-year surge. While domestic sales slipped and there was a build-up of inventories, exports grew further in January and production was held at December's levels. The near-term outlook for the sector as a whole was boosted by another lift in new orders. The major emerging concern – particularly among the more energy-intensive manufacturers – is the deteriorating energy price outlook which threatens to stifle the tentative recovery underway in the sector. Conditions are ripe for the boost to investment that would be provided by an easing of the company tax rate," Mr Willox said.  

Australian PMI®: Key Findings for January:

  • Three of the seven sub-indexes in the Australian PMI® expanded in January (see table below), with the continued expansion of new orders (down 6.9 points to 53.7) a positive indicator for near-term growth.
  • Supplier deliveries (down 5.4 points to 47.0) and sales (down 11.2 points to 47.6) contracted in January, suggesting softer demand coming into 2017 – perhaps rebalancing December’s robust growth.
  • In trend terms*, four of the eight manufacturing sub-sectors expanded in January, with machinery & equipment (up 0.4 points to 57.5) and non-metallic mineral products (up 4.8 points to 65.9) quickening their pace of expansion. Food and beverages (down 0.9 points to 53.9) and petroleum & chemical products (down 0.5 points to 53.5) also continued to grow, if at a slower pace.
  • Wood & paper products (up 1.1 points to 50.5) and metal products (up 1.0 point to 49.9) improved to more stable conditions.
  • The input prices sub-index jumped by 9.5 points in January to 72.3, with some manufacturers questioning their ongoing viability amid surging energy costs. While an expanding selling prices sub-index (up 6.7 points to 52.1) allows some of these cost increases to be passed on, it has been well outpaced by growth in input costs and wages (up 0.7 points to 63.0) in recent months.

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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®

51.2

-4.2

52.7

Exports

54.1

-14.4

54.7

Production

49.9

-8.3

53.5

Sales

47.6

-11.2

54.2

New Orders

53.7

-6.9

55.0

Input Prices

72.3

9.5

62.8

Employment

49.6

2.2

49.0

Selling Prices

52.1

6.7

49.9

Inventories (stocks)

56.0

2.6

51.1

Average Wages

63.0

0.7

58.1

Supplier Deliveries

47.0

-5.4

52.9

Cap. Utilisation (%)

73.8

4.5

74.0

* 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.

Release dates for Australian Performance Indices in 2017

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