Australian Industry Group | Author
Published Jan 07, 2019 10:48
The manufcaturing sector contracted for the first time in 26 months in December
The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) fell 1.8 points to 49.5 in December, signalling the first mild contraction in manufacturing conditions in 26 months and the lowest result since August 2016 (readings below 50 indicate contraction in activity, with the distance from 50 indicating the strength of the decrease).
Ai Group Chief Executive Innes Willox said: "December 2018 saw the end of an extended period of manufacturing expansion after growth slowed in recent months. The mild slowdown in manufacturing recorded in December adds to the picture of a softer closing quarter for 2018. While the cornerstone food & beverage sector and the construction-related non-metallic mineral products sector both continued to expand, contractions in other large sectors – chemicals, metal products and machinery & equipment – dragged the Australian PMI fractionally into negative territory. Production, exports and employment were all lower in the month while domestic sales were held up by discounting that saw a sharp drop in selling prices. This, together with stronger wages growth and a lift in input prices, continued the squeeze on manufacturing margins," Mr Willox said.
Australian PMI: Key Findings for December:
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Seasonally adjusted |
Index this month |
Change from last month |
12 month average |
Trend |
Index this month |
Change from last month |
12 month average |
Australian PMI® |
49.5 |
-1.8 |
56.6 |
Food & beverages |
57.3 |
-0.7 |
58.8 |
Production |
49.4 |
-2.4 |
57.7 |
Machinery & Equipment |
49.6 |
-0.6 |
55.5 |
Employment |
47.9 |
-1.5 |
54.3 |
Metals products |
47.7 |
-1.4 |
54.5 |
New Orders |
49.0 |
0.4 |
57.7 |
Chemicals |
49.7 |
-1.3 |
58.0 |
Supplier Deliveries |
48.4 |
-6.0 |
57.7 |
Non-metallic minerals |
54.6 |
-8.7 |
66.2 |
Finished Stocks |
55.9 |
-1.5 |
53.6 |
TCF, furniture & other |
51.2 |
0.0 |
48.2 |
Exports |
47.1 |
-3.7 |
53.4 |
Wood & paper |
53.6 |
-3.2 |
55.8 |
Sales |
50.3 |
-2.3 |
56.2 |
Printing & recorded media |
74.9 |
6.4 |
55.8 |
Input prices |
76.3 |
1.3 |
71.5 |
||||
Selling prices |
44.1 |
-6.3 |
53.3 |
||||
Average wages |
64.2 |
5.4 |
61.8 |
||||
Capacity utilisation (%) |
75.2 |
-4.3 |
78.6 |
Results above 50 points indicate expansion. * All indexes for sectors in the Australian PMI are reported in trend terms (Henderson 13-month filter).
Background: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) is a national composite index calculated from a weighted mix of the diffusion indices for production, new orders, deliveries, inventories and employment. An Australian PMI reading above 50 points indicates that manufacturing activity is expanding; below 50, that it is declining. The distance from 50 indicates the strength of expansion or decline. Australian PMI results are based on responses from a national sample of manufacturers that includes all states and all sub-sectors. The Australian PMI uses the ANZSIC industry classifications for manufacturing sub-sectors and sub-sector weights derived from ABS industry output data. Seasonally adjusted and trend data are calculated according to ABS methodology. The Australian PMI commenced in 1992. More information about the history and methodology of the Australian PMI® is available online.
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Written By: Australian Industry Group
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