Manufacturing sector revs up again


The manufacturing sector ticked-up in June on the back of improved performances across the textiles, construction materials, basic metals and chemicals, petroleum and coal sub-sectors. 

The Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) lifted 5.2 points to 52.9 to be above the 50-point level separating expansion from contraction for the first time since February.

New orders (54.6) and production (54.7) also expanded in June. 

However, the strong Australian dollar continues to restrict growth with manufactured exports and employment in the sector continuing to contract in June, albeit at a more moderate pace.

"The positive result, particularly the lift in new orders, is good news for a sector that has been weak for some 12 months, said Australian Industry Group Chief Executive, Heather Ridout.

“It will contribute to some extent in recovering lost ground after an extended run of contractions, Ms Ridout said.

“The sector confronts some formidable headwinds in the form of the high dollar, rising energy costs and constraining interest rates and these are unlikely to abate any time soon. These circumstances point to the severe risks for the sector of imposing a price on carbon and the need for very strong measures for trade-exposed businesses and a starting price that gives industry room to adjust."  

PwC Global Head of Industrial Manufacturing, Graeme Billings, said: "The lift in manufacturing performance in June points to the resilience of manufacturers in the face of adversity. 

“The efforts of manufacturers has seen the Australian PMI clawing its way out of negative territory over the past few months. There should, however, be no doubt about how tough conditions are and how important it is for manufacturers to continue to search for ways to lift business performance and seek new avenues of advantage."

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