Australian manufacturing growing again, thanks to food

The manufacturing sector returned to growth after two months of pronounced contraction, according to the Australian Industry Group’s Performance of Manufacturing Index.

The PMI recorded an overall result of 51.5 for June. This was an improvement on the “deep contraction” of 41.6 for May, and the even weaker result of 35.8 for April.

A score of 50 in the index indicates stability, above it expansion, and below it contraction.

The overall positive result was entirely due to the strength of the food and beverage sector, the largest of the six, and which had a result of 55.4. This was assisted by the easing of Covid-19-related restrictions for restaurants and cafes, the Ai Group noted

The other five sectors saw results below 50. (See below.)

“Across the manufacturing sector, production lifted and encouragingly new orders rebounded strongly following sharp contractions in April and May. Employment on the other hand merely stabilised after the contractions of the previous two months,” said Ai Group chief executive Innes Willox.

“Wage levels also levelled off after the very rare fall recorded in May. We are still well short of a recovery even with the quantity of fiscal stimulus in the economy and the next couple of months will provide a critical test of how well the economy is positioned to cope with the withdrawal of stimulus currently scheduled for the end of September.