The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) has increased by 8.1 points to 59.3 in February, recording a fifth consecutive month of expansion and its strongest result since May 2002 (readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase).
“With manufacturing production, employment, sales and exports all growing at a healthy pace, the Australian PMI rose to its highest level in nearly fifteen years in February,” said Ai Group Chief Executive Innes Willox. “The period since 2002 has been particularly difficult for Australia’s manufacturers in the face of the phenomenal expansion of China’s manufacturing sector, extended periods of domestic currency strength and volatility in global confidence, activity and trade. So it’s great that Australia is making again.”
Six of the seven sub-indexes in the Australian PMI expanded in February, with strong growth in new orders (up 6.9 points to 60.6) and sales (up 7.7 points to 55.3) providing an encouraging outlook. Production jumped from stable conditions in January to strong expansion (up 15.4 points to 65.3), as did employment (up 7.9 points to 57.5).
Seven of the eight manufacturing sub-sectors improved in February (all sub-sector indexes in the Australian PMI are reported in trend terms (Henderson 13-month filter), to better identify the trends in these volatile monthly data), with machinery & equipment (up 1.4 points to 60.1), non-metallic mineral products (up 2.8 points to 66.3) and food and beverages (up 1.8 points to 58.8) all building on expansions in January. Only the very small printing & recorded media sub-sector remained in the doldrums (unchanged at 45.1).
The input prices sub-index fell by 11.1 points in February to 61.2, easing back from extremely high levels in January. While the selling prices sub-index inched higher (up 1.6 points to 53.7), growth in input costs and wages (down 4.2 points to 58.8) continues to outpace selling prices.
“The surge in February builds on a recovery from the sluggish performance in the third quarter of last year and marks a fifth month of expansion,” Willox added. “However, substantial challenges remain with further growth constrained by the lack of business investment in recent years and renewed fears about energy security and energy prices now top-of-mind particularly for our more energy-intensive manufacturers.”