Manufacturing conditions flat in October: Ai Group

The Australian Industry Group (Ai Group) has announced that its Australian Performance of Manufacturing Index (Australian PMI) eased slightly in October, dropping 0.6 points to a broadly stable 49.6 indicating a contraction in activity. Readings below 50 points indicate contraction in activity, with lower results indicating a faster rate of contraction. This is the third month of flat conditions, following positive results between February and July.

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

Results were mixed by sector — with consumer-oriented manufacturers performing strongly, but industry-oriented declining. New orders was the only activity indicator in expansion in October. All activity indicators except employment declined from September, showing weakening conditions in manufacturing.

The employment index remains in contraction, reflecting declining production alongside ongoing labour shortages. Input prices continue to grow, but at lower levels than previous months.

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) is a national composite index calculated from a weighted mix of the diffusion indices for production, new orders, deliveries, inventories and employment.

Image: ©iStockPhoto.com/meen_na