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MNI ANALYSIS: Australia AI Mfg Expands for 14th Straight Month
SYDNEY (MNI) - Australia's manufacturing industry expanded in November for
the fourteenth straight month as new orders rose and inventories increased
Data published by the AI Group Friday show all seven manufacturing
sub-indexes expanded in November compared with just three in October. However,
the performance of sub-sectors was mixed, with food and beverages outperforming
but others either slowing or in contraction.
In particular, the non-metallic mineral sub-sector, which is mainly
building materials, fell into contraction at 41.7 after expanding strongly
through much of this year. The decline reflected slowing demand from residential
construction but is still surprising given government and other construction
projects are expected to fill in most of that void.
The large metal products sub-sector fell to 48.6 and was in contraction for
a second month after a strong recovery earlier this year. This sector is
benefitting from engineering activity but is facing headwinds from higher energy
costs and shortages of skilled metal tradespeople.
In contrast, the food and beverages sub-sector rose to the highest level
since April 2016 as production, new orders and exports rose strongly.
The input prices sub-index spiked significantly higher, up 10.2 points to
76.4, the highest level since March 2011. The latest jump is mainly due to rises
in energy input costs and also likely due to a rise in imported input prices.
The rise in input prices is hurting margins as manufacturers are not able to
fully pass them on to selling prices.
Overall, even as the overall manufacturing industry shows strong expansion
there are headwinds from rising input prices due mainly to higher energy costs.
The wages sub-index also rose though skill shortages did not appear to be
widespread. Selling prices rose slightly, indicating some ability to pass on
rising costs, but margins remained under pressure.
From Australia Industry Group's Performance of Manufacturing Index for
November published Friday:
November Change from October
Australian PMI 57.3 +6.2
Production 56.6 +8.2
New Orders 60.4 +5.3
Employment 54.9 +1.7
Inventories 54.4 +11.8
Supplier Deliveries 57.3 +7.1
Exports 57.6 +8.9
Sales 56.2 +5.2
Average Wages 64.1 +5.1
Input Prices 76.4 +10.2
Selling Prices 52.6 +4.0
Capacity Utilization (%) 74.9 +0.2
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: email@example.com
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