Ai Group has released the Australian Performance of Manufacturing Index (Australian PMI) for August 2022, with the report identifying that there are signs of manufacturing slowing down.
The report showed that the Australian PMI dropped 3.2 points to 49.3 in August, indicating a slight contraction (readings below 50 points indicate contraction in activity, with lower results indicating a faster rate of contraction).
Ai Group said this is the first time the index has contracted since January 2022 following the COVID-19 Omicron outbreak.
Ai Group CEO Innes Willox said, “The Ai Group Australian PMI for August points to the end of the recent expansion of manufacturing activity. Production, employment, and sales were all down in August and most manufacturing sectors reported lower performance in the month.
“The chemicals subsector expanded as did the diverse textiles, clothing, footwear, paper and printing subsector. Prices and wages continued to push higher and with the Reserve Bank seeking to ease these pressures by raising interest rates, further slowing in manufacturing looks increasingly likely over the coming months.”
The Australian PMI is a national composite index calculated from a weighted mix of the diffusion indices for production, new orders, deliveries, inventories and employment. Australian PMI results are based on responses from a national sample of manufacturers that includes all states and all sub-sectors.
Other key findings for August 2022 include:
- Labour challenges and supply chain disruption continue to plague manufacturing as in previous months. While new orders continued to grow in August the pace of growth eased and sales dropped in August relative to July, indicating a negative direction for demand.
- Most manufacturing activity indicators contracted at an accelerating rate in August. Despite this, wages rose steeply in August pointing to labour shortage pressures.
- Manufacturing exports declined further; businesses reported volatile export demand.
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