Australia’s manufacturing sector held in modest expansion in August, with PMI Manufacturing unchanged at 52.0. Underlying demand strengthened, however, as new orders rose at fastest pace since January and new export orders returned to growth after a marginal decline in July. Business confidence also improved for a fourth consecutive month to highest level since February, while employment increased for a fourth month.
Production was weaker than demand indicators suggested, slipping slightly after a small increase in July. Manufacturers also reduced purchasing activity and stocks of inputs, while finished-goods inventories posted their sharpest decline since March. Backlogs of work fell markedly and by most in just over a year, helped by continued hiring. S&P Global’s Andrew Harker said stronger orders suggest production decline could prove a “temporary blip” rather than start of a sustained downturn.
Cost and supply pressures remained prominent. Input cost inflation accelerated slightly as firms cited higher freight and fuel expenses linked to Middle East conflict, while suppliers’ delivery times lengthened sharply and slightly more than in July. By contrast, output price inflation slowed for a third straight month to weakest since February. Overall, August survey points to firmer demand and improving confidence, but with production yet to follow and supply-chain disruption still weighing on manufacturers.
Data Summary
| Indicator | August | July | Trend |
|---|---|---|---|
| PMI Manufacturing | 52.0 | 52.0 | Unchanged, modest expansion |
Components
| Component | Trend |
|---|---|
| New Orders | Fastest growth since January |
| New Export Orders | Returned to growth |
| Production | Fell slightly after July increase |
| Employment | Rose for fourth straight month |
| Backlogs of Work | Largest decline in just over a year |
| Business Confidence | Highest since February |
| Input Cost Inflation | Accelerated slightly |
| Output Price Inflation | Slowest since February |
| Suppliers’ Delivery Times | Lengthened sharply again |
| Purchasing Activity | Fell |
| Stocks of Purchases | Fell |
| Finished-Goods Inventories | Sharpest decline since March |
Key Takeaways
- Australia PMI Manufacturing held at 52.0 in August, extending modest sector expansion.
- New orders accelerated to their fastest pace since January, while new export orders returned to growth.
- Production slipped slightly despite stronger demand, reversing July’s small increase.
- Employment rose for a fourth consecutive month, while business confidence reached its highest since February.
- Backlogs fell at fastest rate in just over a year, alongside renewed reductions in purchasing and inventories.
- Input cost inflation accelerated slightly as firms reported higher freight and fuel costs related to Middle East conflict.
- Supplier delivery times lengthened sharply again, pointing to persistent shipping disruption.
- Output price inflation slowed for a third month to weakest since February, suggesting firms were passing through less of higher input costs.
