The Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI) continues to climb, up 1.5 points in July.
The Australian PMI’s strong result for the seventh consecutive month in July suggests the Australian economy is performing well, with demand for manufactured goods increasing 1.5 points to 54.4 points (seasonally adjusted) in the July Australian PMI figures. The Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index measures levels of production, new orders and deliveries for Australian manufacturers to construct a 100 point index, with readings above 50 for the Australian PMI indicating an expansion in activity in the sector.
Mining and infrastructure spending was the main driver of demand in the Australian PMI, with transport equipment, fabricated metals, basic metals and machinery & equipment sub-sectors driving the Index in July. Consumer based manufacturing bounced back in July, with food & beverages; textiles; and clothing & footwear all returning to growth, suggesting that the impact of higher interest rates on disposable incomes may be being offset by a significant improvement in full-time employment.
Australia’s high exchange rate continues to impact manufacturers who export, with exports falling in the July Australian PMI.
Australian Industry Group Chief Executive, Heather Ridout,says manufacturers are looking beyond the Federal Election, to a time where interest rates and fiscal policy are locked in over the medium term to support further increases in activity.
“The recovery in manufacturing continued in July despite the waning impacts of fiscal stimulus and above-normal business interest rates. Private sector demand is slowly re-emerging as a source of growth. While Australia remains the stand-out economy globally, the environment is also patchy and volatile and the world economy faces renewed uncertainty.
PricewaterhouseCoopers Global Head of Industrial Manufacturing, Graeme Billings, believes international uncertainty to be holding back investment in manufacturing, but domestic demand continues to improve for the sector.
“Manufacturers continue to regain lost ground and over the coming year need to look for business expansion opportunities by continuing to invest, innovate and upgrade the skills of their workforces” he said.