The Australian manufacturing sector expanded for a second straight month in August, driven by increased production, employment and new orders.
The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) increased by 1.3 points to 51.7 (readings above 50 indicate expansion).
“A second month of expansion is encouraging for Australian manufacturing, said Ai Group Chief Executive, Innes Willox. “It is also positive for the economy overall which requires a broader base of growth as the mining investment boom continues to unwind.”
Four of the seven activity sub-indexes expanded in August: new orders (up 3.0 points to 52.9) and manufacturing employment (up 3.7 points to 51.3). Both returned to positive territory after two months in contraction.
Production expanded for a second month, if at a slower pace (down 3.0 points to 51.2); and supplier deliveries expanded for a second month (up 2.4 points to 53.0).
Stock levels, however, fell for a seventh consecutive month (up 0.5 points to 48.4) and manufacturing sales returned to contraction (down 5.3 points to 48.6) after a brief expansion in July.
The three-month expansion in exports (down 7.1 points to 44.8) also came to an end.
Three of the eight manufacturing sub-sectors expanded, led by food, beverages & tobacco (down 4.7 points to 54.2) for a 15th month.
The relatively small wood & paper products sub-sector (up 1.8 points to 70) expanded for a sixth month, while textiles, clothing, footwear, furniture & other manufacturing (up 6.0 points to 55.2) returned to expansion after contracting in July.
“Manufacturers are hoping that these positive directions are built upon in coming months and are sufficiently strong to overcome continued headwinds from the reduced orders for materials and equipment from the mining sector and automobile producers,” Mr Willox said.