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Australian PMI®: Manufacturing pushes further ahead in July

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) has gained further momentum in July, increasing by 4.6 points to 56.4 to extend the manufacturing sector's period of unbroken growth to 13 months. This represents the longest phase of expansion for the Australian PMI® since August 2004 (readings above 50 indicate expansion in activity and the distance from 50 indicates the strength of the increase).

Ai Group Chief Executive, Innes Willox, said: "Manufacturing activity entered its second year of expansion in July with the Australian PMI® recording gains in manufacturing production, sales, exports and employment during the month. The lower value of the local currency has been a key driver behind these gains. The strong lift in new orders augers well for the sector's immediate outlook and for a continuation of the role manufacturing is playing in the rebalancing of the broader economy. However, the expansion over the past year has been only a partial recovery from the very serious slump in the years following the global financial crisis.  Further substantial gains in manufacturing will require a lift in business investment both within the sector and across the broader economy," Mr Willox said.

Australian PMI®: Key Findings for July:

  • The Australian PMI® expanded for a 13th straight month in July - the longest unbroken period of growth since August 2004 - increasing by 4.6 points to 56.4.
  • Six of the seven manufacturing activity sub-indexes expanded in July, with deliveries (up 13.7 points to 62.6), sales (up 6.1 points to 59.8), exports (up 9.0 points to 59.5), new orders (up 4.7 points to 58.8) and employment (emerging from contraction to 56.5 points) all expanding at a stronger pace (see table below).
  • Six of the eight manufacturing sub-sectors expanded (that is, above 50 points in three-month moving averages), led by wood & paper products (up 1.9 points to 59.6), printing & recorded media (up 7.0 points to 57.2), petroleum & chemical products (down 4.8 points to 57.3) and non-metallic mineral products (down 1.4 points to 56.9). Food, beverages & tobaccoeased by a point but remains in expansion (52.7 points).
  • Machinery & equipment (up 3.5 points to 48.3) and textiles & clothing (down 0.8 points to 48.1) remained in mild contraction.  
  • The input prices sub-index fell 4.8 points to 59.0 in July, suggesting relatively lower but ongoing price pressures. The wages sub-index increased 4.2 points to 59.7.
  • The selling prices sub-index expanded further in July, climbing 1.7 points to 54.7 - combining with the easing in input prices to perhaps relieve some of the margin pressures long felt by manufacturers.

Read the full report

Seasonally adjusted

Index this month

Change from last month

12 month average

 

Index this month

Change from last month

12 month average

Australian PMI®

56.4

+4.6

52.8

Exports

59.5

+9.0

53.7

Production

52.4

-2.0

53.8

Sales

59.8

+6.1

53.4

New Orders

58.8

+4.7

54.1

Input Prices

59.0

-4.8

64.2

Employment

56.5

+8.6

50.2

Selling Prices

54.7

+1.7

49.5

Inventories (stocks)

49.1

-1.5

51.9

Average Wages

59.7

+4.2

58.5

Supplier Deliveries

62.6

+13.7

52.9

Cap. Utilisation (%)

74.1

-1.2

73.6

* All sub-sector indexes in the Australian PMI® are reported as three-month moving averages (3mma), so as to better identify the trends in these volatile monthly data.
 
Media enquiries: Tony Melville 0419 190 347

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.