Manufacturing grows despite automotive closures

Australian manufacturing continued to grow in October, despite the closure of both the country’s remaining automotive assembly plants. The Ai Group’s Australian PMI came in at 51.1 for the month, a figure that is still indicative of growth, albeit at a much-reduced rate than in recent months.

It did, however, mark a 13th consecutive month of growth, and the longest run of expansion since 2007.

Announcing the figures, Ai Group Chief Executive, Innes Willox, pointed out: "October marked the final, historic end of automotive assembly in Australia. This was reflected in lower results (and an absolute contraction) in the Australian PMI in South Australia. However, outside of the automotive sub-sector, conditions appeared to be relatively buoyant, if a touch slower, for manufacturers in October.”

When viewed by subsectors, the star performer remained the non-metallic mineral products sector, which remained at its record high of 72.2 in October held up by strong demand for building-related products. Food and beverages also continued to perform well (rising to 57.1). And the all-important machinery and equipment subsector remained in positive territory at 56.4, a slight drop from the high in September.

In terms of activity, October was a poor month for production, with that subindex dropping into negative territory at 48.4. This was also reflected in a drop in capacity utilisation to 74.7% - the lowest this year.

Balancing the books continues to be a problem, though. The manufacturing selling price subindex remains in negative territory below 50, indicating minor price reductions during October. Meanwhile, the input prices subindex continues to rise (reaching 66.2 in October) fuelled by electricity and gas price rises together with certain key materials shortages in the food processing sector.

Ai Group

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