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--But Still in Expansion for 13th Straight Month
--Latest Result Affected by Closure of Car Assembly Lines
SYDNEY (MNI) - - Australia's manufacturing industry expanded in October
for the thirteenth straight month but the pace has slowed significantly in the
last two months, with just three of the seven sub-indexes remained in expansion
Data published by the AI Group showed its manufacturing sentiment index
stood at 51.1 in October, down 3.1 points from September and down sharply from
59.8 in August, which was the highest result since 2002.
October marked the end of automotive production in Australia, with the
closure of the last car assembly lines at General Motors in Adelaide and Toyota
in Melbourne. This was reflected in the lower overall results and produced an
absolute contraction in the index in South Australia.
New orders and sales expanded at a slower rate in October, while employment
expanded at a slightly stronger pace. But exports fell into contraction,
inventories and production fell sharply while supplier deliveries was mostly
Among sub-sectors, food and beverage rose to the highest result since May.
But the sector is facing high input costs, with many respondents reporting steep
price rises for dairy product inputs, especially butter, in addition to the
energy and gas price rises.
Expansions in the large petroleum, coal, and rubber products sector and in
the machinery equipment sector slowed further in October.
Among price indexes, input prices rose slightly further, the wages
sub-index eased and selling prices remained in contraction. Gains in selling
prices have remained relatively subdued in 2017, so the latest input price rises
for energy, dairy and other inputs will be squeezing manufacturers' margins
again, AI Group said.
AI Group Chief Executive Innes Willox said that outside of the automotive
sub-sector, conditions appeared to be relatively buoyant, if a touch slower, for
manufacturers in October.
"Positive sources of demand for Australian building materials, machinery
and equipment include apartment and infrastructure construction; defence, mining
and agricultural equipment; renewables and utilities projects. Manufacturers
from all sectors continue to report that higher input costs for electricity and
gas and also for selected raw inputs such as milk and butter are biting into
From Australia Industry Group's Performance of Manufacturing Index for
October published Wednesday:
October Change from September
Australian PMI 51.1 -3.1
Production 48.4 -8.5
New Orders 55.1 -0.8
Employment 53.2 +0.8
Inventories 42.6 -9.1
Supplier Deliveries 50.2 -0.3
Exports 48.7 -2.5
Sales 51.0 -0.4
Average Wages 59.0 -2.2
Input Prices 66.2 +0.4
Selling Prices 48.6 -0.7
Capacity Utilization (%) 74.7 -2.9
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: email@example.com