Activity across the Australian manufacturing sector stabilised in July, after contracting the previous month.
The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) recovered 6.2 points to 50.4 (readings above 50 indicate expansion in activity, the distance from 50 indicating the strength of the increase).
Four of the seven activity sub-indexes expanded in July.
Manufacturing sales were up 12.9 points to 53.9, expanding for the first time in 14 months.
Production was up 10.6 points to 54.2 and supplier deliveries up 6.3 points to 50.6 – reversing sharp declines in June to return to expansion.
New orders (up 7.6 points to 49.8) also recovered lost ground to approach stability, but stock levels (down 1.7 points to 47.9) and manufacturing employment (up 2.6 points to 47.5) remained in negative territory.
The exports sub-index expanded for a third consecutive month (up 1.6 points to 51.8), reflecting the lower Australian dollar.
Three of the eight manufacturing sub-sectors expanded in July, led by food, beverages and tobacco (down 1.7 points to 58.9) for a 14th month.
The relatively small wood & paper products sub-sector (up 4.4 points to 68.2) expanded for a fifth month, while petroleum, coal, chemical and rubber products (up 2.2 points to 50.7) returned to expansion after a brief contraction in June.
Ai Group Chief Executive, Innes Willox, said the lower dollar was an important positive factor in the July turnaround in manufacturing performance which saw another lift in exports.
“Healthy contributions from the food and beverages sector and industry segments linked to residential construction offset continued weakness in other areas including the important machinery and equipment sector, Mr Willox said. “Machinery and equipment is suffering from the drop in demand from mining-related construction and the ongoing wind-down of automotive assembly.”