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MANUFACTURING OFF TO A STRONG START IN 2016

02-02-2016
by 
in 

The Australian manufacturing sector expanded for a seventh straight month in January.

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) declined marginally by 0.4 points to 51.5 to remain above the 50-point level separating expansion from contraction.

This result continued the longest run of expansionary readings since 2010.

Four of the eight manufacturing sub-sectors expanded (above 50 points in three-month moving averages), led by wood & paper products (unchanged at 64.3); petroleum, coal, chemical & rubber products (up 3.9 points to 59.1); and food, beverages and tobacco (up 4.9 points to 56.7). Textiles, clothing, furniture and other manufacturing was broadly stable (50.1 points).   

The non-metallic mineral products sub-sector ended three months of expansion (down 6.4 points to 47.8), while machinery and equipment remained in contraction but is moving steadily towards stabilising with its best result since June 2014 (up 0.4 points to 47.6).

Ai Group Chief Executive, Innes Willox, says manufacturers are benefitting from the lower dollar, enjoying greater share of the domestic market and increased export opportunities.

“The ongoing strength of new orders points to further growth in the months ahead, notwithstanding the contraction in business for automotive supply chains and the further decline in orders from the resources sector,” Mr Willox said.

“While the overall growth is clearly encouraging, there is still a considerable way to go before manufacturing is contributing fully to the much-needed diversification of the domestic economy.”

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