Manufacturing growth continues, despite lockdowns

Manufacturing has proven resilient in July despite lockdowns around the country, with a tenth straight month of expansion, according to the most recent Performance of Manufacturing Index results.

The Australian Industry Group’s PMI recorded an overall result of 60.8 compared to a record-breaking 63.2 in June. 

“While COVID-19 outbreaks and associated restrictions in some states undoubtedly dampened the upswing in activity and shook confidence, the manufacturing sector recorded another strong month of expansion,” said Ai Group chief executive Innes Willox.

A result of over 50 indicates growth, and below it contraction. 50 indicates no change.

The machinery & equipment (up 0.2 points to 65.0), metal products (up 2.2 points to 62.3) and chemicals (up 1.0 point to 66.1) sectors each expanded at record rates.

Each of the six sectors tracked was well above 50, and only the Building, wood, furniture & other (down 0.6 points) and Textiles, clothing, footwear, paper & printing (down 0.3 points) sectors were down over July.

Each of seven activity indices were over 50 in the PMI

“Less positively, input prices escalated at a record rate and the pace of wages growth picked up on both trend and seasonally adjusted measures,” added Willox, who said there were signs of further easing in the months ahead.

“A significant headwind for the sector is that Sydney’s toughest restrictions relate to local government areas where there is a concentration of manufacturing sites and the manufacturing workforce. 

“We expect the dampening impacts of these restrictions will flow along supply chains across the country with some offset from the easing of Victorian restrictions.”

The full results can be read here.

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