The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) increased by 3.2 points to 55.3 over the summer holiday period (December 2020 and January 2021*), with manufacturing businesses reporting stronger and more broad-based recovery over the normally quiet holiday season (readings above 50 points indicate expansion in activity, with higher results indicating a faster rate of expansion).
Ai Group Chief Executive Innes Willox said: "In December and January Australian manufacturing continued to make up ground lost during much of 2020. Production, employment and exports all expanded although domestic sales were down on November levels. The food & beverages, machinery & equipment and chemicals sectors were particularly strong and more than made up for a flat metal products sector, a further decline in building products and weakness among textiles, clothing, footwear, paper & printing businesses. While the sector has not returned to pre-COVID conditions, the turnaround from September is more decisive than was expected and is an encouraging sign of the resilience of Australian manufacturing and the effectiveness of fiscal and monetary policy measures in response to COVID. However, it is clearly still far too early to proclaim a full recovery of the sector," Mr Willox said.
Australian PMI®: Key Findings for December 2020 and January 2021
- Six of the seven activity indices in the Australian PMI® expanded in December 2020 and January 2021 (see table below), with only the sales index contracting (down 4.2 points to 46.5). The exports index jumped into strong expansion (up 11.4 points to 61.4), driven by exports of food & beverages.
- Three of the six manufacturing sectors in the Australian PMI® expanded in December and January, with the food & beverages (up 16.4 points to 59.5), machinery & equipment (up 6.5 points to 66.5) and chemicals (up 8.4 points to 66.3) sectors all increasing at an accelerating pace over the two months. The metal products sector was stable (down 6.0 points to 50.6) while textiles, clothing, footwear, paper & printing plunged into contraction (down 24.4 points to 47.2).
- The input price index eased slightly over the holiday period (down 0.2 points to 64.4), indicating marginally slower price increases on average, while selling prices remained stable (up 1.2 points to 50.8).
- The average wages index (down 3.8 points to 56.4) eased below its long-run average (58.6 points) after rising sharply in November in response to increases to manufacturing award pay rates.
Seasonally adjusted |
Index this month |
Change from last month |
Long-run average |
Seasonally adjusted |
Index this month |
Change from last month |
Long-run average |
Australian PMI® |
55.3 |
3.2 |
50.5 |
Food & beverages |
59.5 |
16.4 |
53.7 |
Production |
56.9 |
4.4 |
51.3 |
Machinery & Equipment |
66.5 |
6.5 |
50.0 |
Employment |
55.1 |
2.3 |
48.9 |
Metals products |
50.6 |
-6.0 |
47.3 |
New Orders |
54.6 |
1.3 |
51.1 |
Petroleum, coal, chemicals & rubber products |
66.3 |
8.4 |
51.4 |
Supplier Deliveries |
55.8 |
2.3 |
50.9 |
Building, wood, furniture & other |
40.0 |
-3.8 |
49.8 |
Finished Stocks |
53.6 |
9.3 |
49.6 |
Textiles, clothing, footwear, paper & printing |
47.2 |
-24.4 |
46.6 |
Exports |
61.4 |
11.4 |
49.9 |
||||
Sales |
46.5 |
-4.2 |
49.1 |
||||
Input prices |
64.4 |
-0.2 |
67.4 |
||||
Selling prices |
50.8 |
1.2 |
48.2 |
||||
Average wages |
56.4 |
-3.8 |
58.6 |
||||
Capacity utilisation (%) |
79.9 |
2.1 |
73.8 |
Results above 50 points indicate expansion.
* The monthly data for the Australian PMI® in December 2020 and January 2021 are combined into one data release that describes two months of survey participation (released on 1 February 2021). This is due to ongoing business disruptions as a result of COVID-19 in Australia.
