The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) increased by a further 1.8 points to 61.7 in April, indicating a seventh consecutive month of recovery from the severe disruptions of COVID-19 in Q2 of 2020 and the index’s highest monthly result since March 2018. It is the third highest rate of growth recorded since the Australian PMI® moved to a monthly format in May 2001 (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion).
All six manufacturing sectors in the Australian PMI® expanded in April 2021, as did all seven activity indicators. The capacity utilisation index hit a record high, suggesting employment and/or investment may need to step up in order to facilitate further growth from here.
Ai Group Chief Executive Innes Willox said: “Australia’s manufacturing industry showed no signs of slowing in the month following the end of the JobKeeper wage subsidy. Instead the industry continued to grow and in fact lifted the pace of expansion in April. All six manufacturing sectors expanded at a healthy rate led by the food & beverage sector with very strong support from the machinery & equipment and building products sectors. There was a large lift in manufacturing production, sales and exports and employment continued to grow solidly – although not at the very rapid pace seen in March. To date the sector as a whole has not been adversely affected by the stronger Australian dollar although a number of businesses are keeping a close eye on where the currency goes from here. That said, the further expansion of new orders in April is an encouraging pointer to continuing positive conditions over the next couple of months,” Mr Willox said.
Australian PMI®: Key Findings for April 2021:
- All seven activity indices in the Australian PMI® expanded in April (see table below), with five expanding at an accelerating rate. Only the employment index fell (down 8.0 points to 58.0), but this was after a record high in March. The new orders index eased slightly but remains in expansion (down 0.1 point to 63.4) and well above its own long-run average (51.3), suggesting further strong production in the coming months.
- All six manufacturing sectors in the Australian PMI® expanded in April (see table below), with all six tracking well above their long-run averages.
- The input prices index climbed a further 2.8 points to 74.1 in April while the selling prices index increased but at a slower pace than in March (down 6.8 points to 52.9). This indicates further selling price increases in April, albeit at a slower pace than in March, with manufacturers now appearing able to pass on their elevated input costs.
- The average wages index dropped slightly but remained in expansion in April (down 2.0 points to 61.8), while a record high in the capacity utilisation index (up 2.5 percentage points to 85.1%) suggests that employment and / or investment may need to step up to facilitate further growth from here.
Background: 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. An Australian PMI® reading above 50 points indicates that manufacturing activity is expanding; below 50, that it is declining. The distance from 50 indicates the strength of expansion or decline. Australian PMI® results are based on responses from a national sample of manufacturers that includes all states and all sub-sectors. The Australian PMI® uses the ANZSIC industry classifications for manufacturing sub-sectors and sub-sector weights derived from ABS industry output data. Seasonally adjusted and trend data are calculated according to ABS methodology. The Australian PMI® commenced in 1992. More information about the history and methodology of the Australian PMI® is available online.
Source: Ai Group