26 February 2018

Bob Cunneen, Senior Economist and Portfolio Specialist

Australian manufacturing vs global surveys

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Sources: Australian Industry Group (AIG) Performance of Manufacturing Index (PMI) Markit Economics for Purchasing Managers Index

Australia’s manufacturing sector has struggled over recent years with intense global competition. Factory closures and large job losses were all too common across the landscape.

However since 2016, Australia’s manufacturing sector has improved. The AIG PMI survey shows that Australian manufacturing conditions (black line) are robust entering 2018.  According to AIG, “January marked a sixteenth month of expanding or stable conditions for the Australian PMI® and the longest run of expansion since 2005.” Notably Australian manufacturers are seeing increased activity from “supplying upcoming infrastructure projects and the mining industry”. Remarkably, Australia’s PMI survey has even outperformed its global counterpart since the start of 2017 (red line). 

While there are still some significant challenges in terms of high energy prices eroding profit margins, Australia’s manufacturers have entered 2018 with fire in the furnace rather than ashes.

Source: nab asset management 26 Feb 2018

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