After a tough few months, Australia’s SME manufacturers are finally seeing a glimmer of hope. Fresh data from the latest Unleashed Manufacturing Report reveals a 4.5% rise in average sales revenue last quarter, signalling a positive shift across the sector.
From food and beverages to construction and chemicals, local makers are gearing up for growth, stocking up inventory, and riding a wave of renewed consumer demand. Experts are calling it the start of a brighter chapter for the industry—and it’s not just about sales. Strong purchase orders and a cautious optimism among manufacturers point to a sector ready to bounce back. These findings, drawn from the Manufacturers’ Health Index by inventory management provider Unleashed, are based on detailed analysis of over 1,300 SME manufacturers, offering a comprehensive view of the health of the sector.
Confidence returns to the industry
For many manufacturers, the rise in sales revenue has been a welcome relief after several tough years. Jarrod Adam, Unleashed’s Head of Product, highlighted how businesses have weathered challenges by focusing on operational efficiencies, clearing excess stock, and strengthening their pipelines. “Seeing sales revenue increase is a sign that manufacturers are not just surviving but setting themselves up to thrive,” Adam explained. “The economic clouds are starting to lift, and with strong foundations in place, Australian manufacturers are well-positioned to take advantage of better conditions.”
Broader trends point to a brighter future
Across all industries, purchase orders saw a significant increase of 8.6% this quarter and an impressive 23.7% compared to the same period three years ago. This surge is a strong indicator of future sales growth, particularly in sectors with longer sales cycles. Standout performers include the Beverage and Clothing, Footwear, and Accessories industries, which showed substantial gains in both sales revenue and purchase orders. The construction sector, often viewed as a bellwether for broader economic trends, also experienced a notable 9.45% increase in purchase orders, suggesting a rebound that could ripple through other industries.
“This kind of activity in construction is often the first sign of a broader recovery,” Adam said. “If the sector continues on this trajectory, it could be a harbinger of sustained growth across the manufacturing landscape.”
Challenges amid the optimism
While the overall picture is bright, not all metrics pointed upward. Profitability, as measured by Gross Margin Return on Inventory (GMROI), fell by 8.36% this quarter. However, this decline is likely temporary, driven by elevated investments in inventory to meet anticipated demand. “Profitability reflects past performance, while purchase orders and sales point to the future,” Adam noted. “This dip in margins is not a red flag but rather a reflection of businesses gearing up for continued growth. In the long term, this is a positive step for the sector.”
Excess stock levels have remained steady, up just 0.6% from last quarter but 27.7% higher than the same period three years ago. For manufacturers, especially those dealing with durable goods, this indicates a strategic buildup of inventory to meet forecasted demand.
Sector spotlights
Several key industries are leading the charge:
- Chemicals: Sales revenue rose 9.18% this quarter, with companies like Enzyme Generation benefiting from increased consumer demand for environmentally sustainable products. Director Evan Smith noted a shift in public perception, driving growth in green manufacturing.
- Construction: Purchase orders rose by 9.45%, pointing to a recovery in an industry that often experiences long lead times between orders and revenue.
- Food and Beverages: Both sectors posted solid growth, with beverages seeing a 14.22% increase in sales revenue and food manufacturers achieving a 7.24% rise. Strong purchase order metrics suggest even greater gains ahead.
A turning point for manufacturing
The latest figures reveal that Australian SME manufacturers are steadily emerging from the economic challenges of recent years. With sales revenue and purchase orders climbing, the sector appears poised for sustained growth. “This report tells a story of resilience and renewal,” Adam concluded. “Manufacturers have adapted, improved their business health, and are now positioned to take advantage of improving economic conditions. It’s an exciting time for the industry as it looks toward a brighter future.”
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
