Australian PMI®: Manufacturing enters 2017 on the up

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Ai Group Chief Executive, Innes Willox, said: 'Despite a small fall in sector-wide employment in December, manufacturing production, sales, exports, and new orders all grew strongly in the month, providing a running start to the new year. Four of the five larger manufacturing sub-sectors - food & beverages; petroleum, coal, chemicals & rubber products; non-metallic mineral products; and machinery and equipment - saw healthy growth while the metal products sub-sector closed a difficult year in the red. The positive result for producers of machinery & equipment comes despite the steading unwinding of automotive assembly and points to a tentative pick-up in business investment. Early passage of the Government's Enterprise Tax Plan would provide momentum and an important boost to activity,' Mr Willox said

Australian PMI®: Key Findings for December:

• Six of the seven sub-indexes in the Australian PMI® improved from November (see table below), headed by a surge in exports (up 12.6 points to 68.5) and strong expansions in new orders (up 1.1 points to 60.6) and sales (up 5.3 points to 58.8).
• Employment slipped in December (down 4.9 points to 47.4), in line with recently weaker jobs growth.
• Five of the eight manufacturing sub-sectors expanded in December (that is, above 50 points in three-month moving averages), with food and beverages (up 0.6 points to 57.1) and petroleum & chemical products (down 0.6 points to 56.5) continuing to perform solidly. Machinery & equipment (up 0.1 points to 55.0) is showing signs of continued resilience, while non-metallic mineral products bounced back to expansionary conditions (up 7.1 points to 57.9).
• Input prices remained elevated in December (up 0.3 points to 62.8) while the selling prices sub-index fell 6.1 points to a contractionary 45.4, indicating a continued tightening of margins for manufacturers heading into 2017.
• The wages sub-index of the Australian PMI® increased significantly (up 8.5 points to 62.3), perhaps heralding an early 2017 pick-up in manufacturing wages growth.

View all Economic Indicators

Seasonally adjusted	Index this month	Change from last month	12 month average		Index this month	Change from last month	12 month average
Australian PMI®	55.4	+1.2	52.7	Exports	68.5	+12.6	54.7
Production	58.2	+4.7	53.7	Sales	58.8	+5.3	53.9
New Orders	60.6	+1.1	54.9	Input Prices	62.8	+0.3	62.0
Employment	47.4	-4.9	48.8	Selling Prices	45.4	-6.1	49.7
Inventories (stocks)	53.4	+7.2	51.4	Average Wages	62.3	+8.5	57.8
Supplier Deliveries	52.4	-0.3	53.0	Cap. Utilisation (%)	69.3	-7.3	73.8

Release dates for Australian Performance Indices in 2017

Background: The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) is a seasonally adjusted national composite index based on the diffusion indices for production, new orders, deliveries, inventories and employment with varying weights. An Australian PMI® reading above 50 points indicates that manufacturing is generally expanding; below 50, that it is declining. The distance from 50 is indicative of the strength of the expansion or decline. Australian PMI® results are based on responses from around 200 companies from a rotating sample of manufacturers. The manufacturing sub-sector categories in the PMI match the ANZSIC industry classifications for manufacturing and are weighted, based on 2011-12 industry output data from the ABS.

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