Manufacturing continues growth in July

The manufacturing sector entered its third quarter of growth in July following stronger levels of production, new orders and deliveries

Manufacturing continues growth in July
Manufacturing continues growth in July
August 2, 2010

The manufacturing sector entered its third quarter of growth in July on the back of stronger levels of production, new orders and deliveries.

As announced today, the seasonally adjusted Australian Industry GroupPricewaterhouseCoopers Australian Performance of Manufacturing Index rose 1.5 points to 54.4 in July.

This marks a seventh straight month of growth in manufacturing (readings above 50 indicate an expansion in activity).

The transport equipment, fabricated metals, basic metals and machinery & equipment sub-sectors benefited from stronger demand in the mining and infrastructure sectors in the month.

Encouragingly, the consumer-related sectors of food & beverages; textiles; and clothing & footwear saw solid growth, suggesting the impact of higher interest rates on disposable incomes may be being offset by a significant improvement in full-time employment growth over recent months.

However, the high exchange rate continues to affect manufacturers with exports falling in July.

Australian Industry Group Chief Executive, Heather Ridout, says the recovery in manufacturing continued in July despite the waning impacts of fiscal stimulus and above-normal business interest rates.

"Private sector demand is slowly re-emerging as a source of growth. While Australia remains the stand-out economy globally, the environment is also patchy and volatile and the world economy faces renewed uncertainty," Ridout says.

"Manufacturers will be looking for policies in a post-election environment that will help secure a full recovery in the sector and foster longer-term national productivity growth. Interest rates and fiscal policy need to be set to support further expansion," she says.


Key findings from the Australian PMI for July show paper, printing & publishing was the fastest expanding sub-sector in the month.

The new orders sub-index grew 5.5 points, while the production sub-index lifted to 57.3.

After three months of growth, the employment sub-index fell modestly to 47.7.

Manufacturing inventories rose moderately in July, but at a slower pace, with the seasonally adjusted sub-index down 0.9 points to 52.9.

Growth was strongest in New South Wales, followed closely by Queensland, South Australia and Tasmania.

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