MANUFACTURING ACTIVITY ON THE RISE

Manufacturing activity improved marginally last month, buoyed by a lift in new orders.

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) increased by 0.7 points to 50.1 in November.

This indicates a slight expansion (readings above 50 indicate an expansion in activity, below 50 indicates a contraction).

Respondents to the Australian PMI noted substantial headwinds with the steep decline in mining investment and the impending closure of Australian automotive assembly.

This was stifling business sentiment and the appetite for investment, said Ai Group Chief Executive, Innes Willox.

“Businesses also noted that the still-strong Australian dollar continues to support intense import competition,” Mr Willox said.

Two of the five activity sub-indexes were above 50 points this month, with new orders up 3.1 points to 54.3 and supplier deliveries climbing 7.2 points to 52.1.

In contrast, the production, stocks and exports sub-indexes all declined below 50 points following very mild expansion in October, while manufacturing employment and sales continued to contract.

“While the improvement in manufacturing activity in November is slight, it and the lift in new orders are welcome signs of the resilience of the sector in the face of still-testing conditions,” said Mr Willox.

“The lower dollar, an easing in energy costs, moderate wages growth and relatively low interest rates are all helping to underpin the sector’s performance, he said.

“Demand for locally made inputs and components flowing from stronger residential construction activity is also a positive for the sector.”

Among the eight manufacturing sub-sectors, four expanded in November.

The large food, beverages & tobacco (up 2.4 points to 59.1 points) and the smaller wood & paper products (up 2.1 points to 61.6 points) sub-sectors continued their recent strong growth, while conditions improved in the textiles, clothing & furniture (up 7.3 points to 54.4) and non-metallic mineral products (up 5.0 points to 50.2) sub-sectors.