Production activity is falling for the first time in six months

Ai Group’s Australian Performance of Manufacturing Index (Australian PMI®) fell 3.2 points to 49.3 in August, marking the first time the index has contracted since January 2022 following the Omicron outbreak.

Ai Group Chief Executive Innes Willox said the Australian Purchasing Managers’ Index for August points to the end of the recent expansion in manufacturing activity as output, employment and sales all fell and most manufacturing sectors reported lower performance for the month.

“The chemical sub-sector expanded, as did the various textile, apparel, footwear, paper and printing sub-sectors. Prices and wages continued to rise, and as the Reserve Bank seeks to alleviate this pressure by raising interest rates, a further slowdown in output appears increasingly likely in the coming months.”

Main results for August 2022

All manufacturing sub-sectors saw lower activity except chemicals and miscellaneous textiles, clothing, footwear, paper and printing.

Work-related challenges and supply chain disruptions continue to impact manufacturing similar to previous months.

While new orders continued to pick up, the pace of growth slowed and sales fell in August compared to July, suggesting a negative demand direction.

Most activity indicators in manufacturing contracted at an accelerating rate in August. Wages nevertheless rose sharply, indicating a labor shortage. It is hoped the recent downturn will be addressed at today’s Works and Skills Summit in Canberra, where industry is meeting with Government to chart a way forward.

Manufacturing exports continued to fall, while companies reported volatile export demand.

Find the full report here.

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