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Australian PMIĀ®: Manufacturing consolidates in May

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) has consolidated its recent gains, falling 2.4 points to 51.0 in May to remain above the 50-point level separating expansion from contraction. The result continues the longest unbroken period of growth for the Australian PMI® since September 2006, now at 11 months.

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Ai Group Chief Executive, Innes Willox, said: "The Australian PMI® consolidates almost a year of expansion and continues the longest unbroken period of growth for the Australian PMI® since September 2006. Australian manufacturing is recovering in 2016 in response to the lower dollar, but it is also rebalancing in response to changes in global production and consumption trends. We are seeing an increasing focus on consumable goods such as food, groceries and health products as well as building materials for the construction industry. We are still seeing contraction, however, in the heavy industrials categories and especially in metals and some types of machinery and equipment manufacturing such as automotive production. On balance, the positives are outweighing the negatives at present," Mr Willox said.

Australian PMI®: Key Findings for May:

  • The Australian PMI® expanded for an eleventh straight month in May - the longest unbroken period of growth since September 2006 - despite easing by 2.4 points to 51.0.
  • As in April, six of the seven activity sub-indexes expanded in May, although most eased from last month (see table below). The exception, once again, was the employment sub-index (down 3.4 points to 45.6).
  • Five of the eight manufacturing sub-sectors expanded (that is, above 50 points in three-month moving averages). Food, beverages & tobacco (down 8.8 points to 65.3) and wood & paper products (up 1.9 points to 67.7) remained in strong expansion, as did petroleum & chemicals (up 5.4 points to 59.9). 
  • Printing & recorded media (up 4.1 points to 49.7) and machinery & equipment (up 2.8 points to 50.6) both stabilised, while metal products (up 0.2 points to 44.1) and textiles, clothing & other manufacturing (down 3.9 points to 47.1) contracted in May.  
  • The input prices sub-index increased by 5.9 points in May to 63.2, reversing the easing in input price pressures seen last month. Wages growth strengthened again, rising 3.9 points to 61.3.
  • The manufacturing selling prices sub-index reversed its recent downward trend, climbing 5.5 points to stabilise at 50.6.

Full report (available at 9.30am): http://www.aigroup.com.au/portal/site/aig/economicindicators/
Media enquiries: Tony Melville 0419 190 347


Seasonally adjusted

Index
this month

Change from
last month

12 month
average

 

Index
this month

Change from
last month

12 month
average

Australian PMI®

51.0

-2.4

51.7

Exports

51.2

-4.5

53.0

Production

50.9

-5.9

53.1

Sales

55.9

-0.9

51.8

New Orders

52.2

+0.1

52.3

Input Prices

63.2

+5.9

64.5

Employment

45.6

-3.4

49.2

Selling Prices

50.6

+5.5

48.9

Inventories (stocks)

56.1

-0.6

51.7

Average Wages

61.3

+3.9

58.3

Supplier Deliveries

52.3

-1.7

51.5

Cap. Utilisation (%)

75.4

+1.0

73.1

* 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.

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.