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Australian PMI®: Manufacturing grows for eighth successive month

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) stayed in expansionary territory for an eighth consecutive month in May, although the pace of expansion eased by 4.4 points to 54.8, indicating a slower rate of growth (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: "Manufacturers reported further gains in May building on growth in the previous seven months. Demand is relatively elevated for most sub-sectors and employment, sales and new orders are all growing, albeit at more subdued rates. Exports remain a key source of growth with many manufacturers strongly focused on growing their sales overseas despite stiff global competition.

"Regardless of the shrinking local auto industry and generally low business investment, the important machinery and equipment manufacturing sub-sector again built on what has been an impressive recovery after an extended slump. Less positively, slower local retail conditions are having some negative impacts for manufacturers and elevated input costs are an ongoing challenge for everyone, particularly due to rising electricity and gas costs," Mr Willox said.

Australian PMI®: Key Findings for May:

  • All seven activity sub-indexes in the Australian PMI® expanded in May (see table below), albeit at a slower rate than in April. New orders remained elevated (down 3.4 points to 58.1), suggesting the current expansion has some way to run.
  • As in April, seven of the eight manufacturing sub-sectors expanded strongly in May (trend data*), with all but the textiles, clothing & furniture sub-sector (down 2.7 points to 39.4) exceeding 56 points.
  • The input prices sub-index expanded at a slower rate in May (down 6.0 points to 63.8), while wages elevated a further 3.0 points to 61.4.
  • The selling prices sub-index recorded a fifth consecutive month of expansion in May (down 2.7 points to 56.2), perhaps reflecting inflationary conditions but also indicating some relief to manufacturers in being able to pass on more of their cost increases.

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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®

54.8

-4.4

53.9

Exports

52.0

-6.6

54.8

Production

52.2

-8.5

54.1

Sales

54.4

-11.1

54.9

New Orders

58.1

-3.4

57.0

Input Prices

63.8

-6.0

63.8

Employment

54.2

-1.7

51.2

Selling Prices

56.2

-2.7

52.5

Inventories (stocks)

50.9

-0.3

50.0

Average Wages

61.4

+3.0

58.3

Supplier Deliveries

55.8

-6.5

53.8

Cap. Utilisation (%)

78.9

+1.5

75.2

* 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.

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.