The Australian manufacturing sector expanded strongly again in March, with the Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) down 1.8 points to register a solid 57.5. This was the sixth consecutive month of expansion for the Australian PMI.

All seven activity sub-indexes in the Australian PMI expanded in March, with expansion in new orders (up 2.0 points to 62.6) and sales (up 2.4 points to 57.7) strengthening (readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase). Five of the eight manufacturing sub-sectors expanded in March (all sub-sector indexes are reported in trend terms (Henderson 13-month filter) to identify trends in volatile monthly data), with the strongest growth in non-metallic mineral products (up 0.6 points to 64.8) and food and beverages (up 1.6 points to 63.4). Encouragingly, machinery & equipment continued to strengthen (up 0.9 points to 60.5) despite the ongoing exit of automotive assembly.

“The recovery in Australian manufacturing continued to build in March with another month of expansion in sales, production, employment and exports,” said Ai Group Chief Executive, Innes Willox. “The Australian PMI result of 57.5 points was the sixth successive month of expansion and reflected robust growth in the key sub-sectors of food & beverages; machinery & equipment; metals products and non-metallic minerals. With new orders also growing strongly, the immediate outlook is for further and very welcome expansions in the manufacturing sector.”

The input prices sub-index increased by 4.3 points in March to 65.5, with respondents pointing to higher steel and bulk commodity prices and soaring energy costs. The selling prices sub-index was largely unchanged (down 0.2 points to 53.5), with manufacturers’ improved ability to recover cost increases still being outpaced by growth in input costs and wages (down 4.8 points to 54.0).

“The momentum in the sector is unambiguously good news for manufacturers, their employees and for the broader economy,” added Willox. “Nevertheless, there is still a very considerable way to go before the fragilities of the past decade are behind us and we have a manufacturing sector that is contributing its full potential in a more balanced Australian economy. Before this can occur, the current uncertainties surrounding energy affordability, security and sustainability need to be urgently addressed.”