Australian manufacturing growing at fastest pace since 2022

S&P Global has reported that Australia’s manufacturing sector continues to expand, and expansion further accelerated midway through the third quarter, according to PMI data.

The report said that higher new orders, supported by a renewed rise in exports, led to a solid rise in production. This occurred as confidence soared to the highest level since February 2022. In turn, manufacturers hired additional staff and raised their purchasing and inventory levels. Meanwhile price pressures remained historically subdued.

The headline seasonally adjusted S&P Global Australia Manufacturing Purchasing Manager’s Index (PMI) rose to 53.0 in August, up from 51.3 in July. Posting above the 50.0 no-change mark for an eighth consecutive month, the latest reading signalled that manufacturing sector conditions continued to improve and at the fastest pace since September 2022.

Manufacturing production expanded at a solid rate in August in response to greater inflows of new work. Better underlying demand conditions and rising client interests drove the latest rise in new orders, according to panellists. New export orders also returned to growth for the first time since May, albeit only marginally.

To cope with rising workloads, Australian goods producers hired additional staff on both a full- and part-time basis. The rate of job creation was marginal but nevertheless extended the sequence of jobs growth to six months. Higher workforce capacity thereby enabled companies to lower their level of outstanding orders for a fourth successive month in August.

Purchasing activity also increased in response to rising new work inflows. This marked the first rise in buying activity since April, with some manufacturers also reporting raising purchasing levels with the intention to build safety stock as lead times lengthened. Indeed, shipment delays and supply shortages underpinned another worsening of vendor performance in the latest survey period.

S&P Global also said that business confidence among Australian manufacturers improved in August to the highest level in three-and-a-half years. Firms expressed hopes for new product launches, business promotion plans and a broad improvement in economic conditions to spur sales in the year ahead. The level of optimism was also above its long-run average.

“Australia’s Manufacturing PMI data showed a further improvement in business conditions at the goods producing sector midway through the third quarter of 2025,” said Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence. “The rates at which new orders and output rose were both solid and supported by a renewed rise in new export orders during the latest survey period. Not only has this reflected improving domestic conditions, as interest rates were lowered, but also nascent improvements in external conditions as trade uncertainty somewhat eased with lower-than-expected US tariffs for regional economies.

“Overall, the latest data are also pointing to the likelihood of continued output growth in the near term both directly through the uplift of the Future Output Index and indirectly through higher purchasing and hiring activity. Price pressures also remained subdued in August despite stronger demand, boding well for further sales growth in the near-term.”

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