The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) rose by 1.4 points to 63.2 in June, delivering the highest monthly result since the Australian PMI commenced in 1992.

All six manufacturing sectors in the Australian PMI expanded in June, with five expanding at a faster pace than in May (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion). Businesses that directly supply the construction sector reported strong results, saying they are investing to increase capacity, increasing employment and diversifying suppliers to keep up with demand.

Ai Group Chief Executive Innes Willox said: “The 2020-21 financial year closed on a high note for Australia’s manufacturing sector. Ai Group’s June Australian PMI pointed to record growth across the sector fuelled by the fastest recorded pace of expansion in each of the food & beverages; machinery & equipment; building materials; and chemicals sectors.”

All seven activity indices in the Australian PMI expanded in June. Exports returned to strength, reversing May’s contraction (up 11.3 points to 60.2), while new orders accelerated into very strong expansion (up 5.7 points to 70.6), suggesting confidence for ongoing demand and a further period of strong activity ahead for manufacturers’ sales and production.

The input prices index moderated in June but remained elevated (down 3.3 points to 78.8). Input prices remain high for various raw materials, due to high global commodity prices for metals, oil and other key inputs. Manufacturers’ selling prices rose for a fifth consecutive month (up 5.3 points to 63.6), suggesting that more manufacturers are passing on some of their higher input costs to customers. The average wages index fell slightly in June (down 1.3 points to 61.6), while the capacity utilisation index (82.3%) reduced by 2.8 percentage points from its series high in April and May.

“Production, employment, and sales exports were all higher than in May although the rate of acceleration generally eased,” Willox added. “Exports of manufactured goods surged in June and new orders were also higher, pointing to the likelihood of further expansion in the months ahead. The strength of the recovery continued despite headwinds from COVID outbreaks and associated lockdowns and border restrictions, high freight costs and the widespread difficulties employers are experiencing in filling positions.”