October PMI shows “weakening conditions in manufacturing”

The Australian Industry Group’s Performance of Manufacturing Index slipped below 50 in October, described as the third month of flat conditions and “broadly stable” in seasonally adjusted terms.

The third month of overall flat conditions follows a positive start to the year and month-on-month growth across February to July. The PMI fell 0.6 points in October to 49.6. 

Any result under 50 represents contraction, and above 50 represents growth. 

“Australian manufacturing is in a holding pattern, with three straight months of flat results,” said Ai Group Chief Executive Innes Willox.

Among activity indicators, the only expansion last month was seen in new orders. 

All activity indicators besides employment declined from September, which shows “weakening conditions in manufacturing,” according to the Ai Group. 

“Demand conditions in the market remain stable, but longstanding supply-side problems, such as labour and supply chain shortages, continue to drag on the industry. Manufacturers are concerned that if economic conditions deteriorate – as this month’s Federal budget forecasts – they will be unable to maintain employment and production in the face of these pressures,” added Willox.

The best-performing of the six sectors tracked was food and beverage. It returned to growth, up 6.8 points to 55.4. 

“Results were mixed by sector – with consumer-oriented manufacturers performing strongly, but industry-oriented declining,” explained a summary of the survey’s results.

More information can be accessed here.

Picture: www.aigroup.com.au