Australian manufacturing grew in September

Is Australian manufacturing beginning to run out of steam? The sustained growth of the Ai Group’s Australian PMI has begun to falter, with the September figure still in positive territory at 54.2, but well down from the previous month’s 15-year high of 59.8.

According to Ai Group Chief Executive, Innes Willox, "This year's recovery in manufacturing activity is continuing, but the September Australian PMI suggests that conditions are moderating and growth is decelerating.”

Nonetheless, the September 2017 figure marks the 12th consecutive month of growth.

Willox went on to point the finger of blame squarely at the energy sector, saying:
"Of great concern to all manufacturers continues to be the impact of energy and gas prices on their bottom line. Mounting energy costs are further squeezing already-fragile profitability."

And the figures bear this out, with the input prices sub-index rising to 65.8 points in September, fed by energy costs and increasing raw materials prices for some key commodities. Perhaps surprisingly, the wages sub-index also rose, reaching an above average 61.2 points in September.

The selling prices sub-index fell by 4.4 points to 49.3 in September.

In terms of industry sectors, the star performer was non-metallic mineral products, which hit a new record high of 75.5 points, while the other large sub-sectors grew at a slower pace.

The main positive sources of local demand for manufacturers in September 2017 included construction, mining and agricultural equipment, renewables and utilities.

Ai Group

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