Australian PMI: Manufacturing recovery continues with three-year high

It is the third highest rate of growth recorded since the Australian PMI moved to a monthly format in May 2001 (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion). All six manufacturing sectors in the Australian PMI expanded in April , as did all seven activity indicators. The capacity utilisation index hit a record high, suggesting employment and/or investment may need to step up in order to facilitate further growth from here.

Ai Group Chief Executive Innes Willox said: “Australia’s manufacturing industry showed no signs of slowing in the month following the end of the JobKeeper wage subsidy. Instead the industry continued to grow and in fact lifted the pace of expansion in April. All six manufacturing sectors expanded at a healthy rate led by the food & beverage sector with very strong support from the machinery & equipment and building products sectors. There was a large lift in manufacturing production, sales and exports and employment continued to grow solidly – although not at the very rapid pace seen in March.”

All six manufacturing sectors in the Australian PMI expanded in April, with all six tracking well above their long-run averages. All seven activity indices in the Australian PMI expanded, with five expanding at an accelerating rate. Only the employment index fell (down 8.0 points to 58.0), but this was after a record high in March. The new orders index eased slightly but remains in expansion (down 0.1 point to 63.4) and well above its own long-run average (51.3), suggesting further strong production in the coming months.

The input prices index climbed a further 2.8 points to 74.1 in April while the selling prices index increased but at a slower pace than in March (down 6.8 points to 52.9). This indicates further selling price increases in April, albeit at a slower pace than in March, with manufacturers now appearing able to pass on their elevated input costs.

The average wages index dropped slightly but remained in expansion in April (down 2.0 points to 61.8), while a record high in the capacity utilisation index (up 2.5 percentage points to 85.1%) suggests that employment and/or investment may need to step up to facilitate further growth from here.

“To date the sector as a whole has not been adversely affected by the stronger Australian dollar, although a number of businesses are keeping a close eye on where the currency goes from here,” Willox added. “That said, the further expansion of new orders in April is an encouraging pointer to continuing positive conditions over the next couple of months.”