The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) rose by 4.8 points to 53.2 in February, reflecting mild improvements and a rebound into positive territory after a sharp decline in the December 2021-January 2022 report.
Four of the seven activity indices in the Australian PMI expanded in February (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion), with the production (up 2.7 points to 54.6), new orders (up 8.5 points to 59.8) and finished stocks (up 3.4 points to 55.9) indexes expanding at an accelerating rate. Supplier deliveries improved but remained narrowly in contraction (up 11.2 points to 49.0) while employment (down 1.9 points to 43.5) and exports (down 2.5 points to 42.6) fell further into negative territory.
“Australia’s manufacturing sector edged back into expansion during February following the sharp labour and supply chain disruptions of the December-January period,” said Innes Willox, Chief Executive of Ai Group. “Price and wage pressures continued in February with some easing in the pace of increase in input prices. At the same time, selling prices accelerated suggesting further recovery of earlier cost increases. Encouragingly, new orders were very strong and point to further strength over coming months.”
Four of the six manufacturing sectors in the Australian PMI expanded in February, with metal products (up 2.8 points to 51.6) and TCF, paper & printing products (up 0.3 points to 52.3) reporting mild expansion, while chemicals (up 5.4 points to 53.5) and machinery & equipment products (up 3.5 points to 57.0) were relatively strong. The very large food & beverage sector improved but remained in contraction (up 9.3 points to 47.4)
The input prices index fell in February (down 6.7 points to 75.6), indicating that input price increases decelerated, on average, compared to the preceding holiday period. Selling prices increased (up 6.8 points to 71.6), reversing the temporary drop reported in December 2021-January 2022. The average wages index increased slightly (up 1.4 points to 64.9) and remained in strong expansion in February and above its long-run average (58.9 points).
“The performance of the machinery & equipment sector was the strongest on the back of healthy demand from construction, agriculture, and logistics businesses,” Willox added. “The other manufacturing sectors reporting improved performance in February were chemicals; metals products; and textiles, clothing, footwear, paper & printed products. In contrast, the food & beverage sector declined again – although at a noticeably slower pace while the building products sector slipped into contraction. Employment eased across the sector while production lifted and sales growth edged ahead.”