Australian Industry Group Performance of Manufacturing Index for August

Key points from AiG:

Greater variation in activity across the sub-sectors.

Four of the five activity sub-indexes above 50 points and indicating growth in August

  • Sales grew in August but at a slower rate than July (down 6.8 points to 53.5 points)
  • New orders and employment also grew at a slower pace, falling to 54.2 points and 52.5 points respectively
  • Stocks (inventory) built up at a faster pace in August, with this sub-index rising to 54.9 points
  • Supplier deliveries were broadly stable in August (49.7 points) after growing in previous months
  • Capacity utilisation hit a record high of 81.4% of available capacity being utilised across the services sector in August

Seven of the nine sub-sectors expanded in August

  • Two sub-sectors hit record highs (trend); the relatively small personal and recreational services sub-sector rose to 67.6 points and communications services rose to 61.4 points.
  • Activity in finance and insurance (61.5 points) accelerated, as did wholesale trade (57.5 points), transport and storage (55.4 points) and health and community services (52.5 points).
  • Property and business services decelerated to a more modest rate of expansion (51.2 points).
  • At the other end of the performance range and indicating very reluctant discretionary spending by consumers, activity in retail trade shrank at a worse rate in August (down by 1.1 points to 42.1 points), as did activity in the hospitality sector (accommodation, cafes and restaurants, down by 4.5 points to 38.5 points).

Respondents in the business-to-business sub-sectors noted positive demand from the construction and mining sectors, particularly in the east coast states. Respondents in retail and hospitality are reporting reluctant spending due to flat income growth, adverse winter weather and relatively poor consumer confidence.

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Earlier in the month:

AiG Manufacturing PMI (August): 59.8 (vs. prior 56.0)

  • highest since 2002
  • eleventh consecutive month of expansion ... the longest consecutive run of expansion since 2007

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Earlier today, another services PMI from Australia!