Manufacturing has a strong start to 2018

The Australian Industry Group (Ai Group) has reported that the Australian Performance of Manufacturing Index (Australian PMI) increased by 2.5 points to 58.7 in January, indicating faster growth than at the end of 2017. Readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase.

“Australia’s manufacturing industry enjoyed a strong start to the year and added to the longest manufacturing expansion in more than a decade,” said Ai Group Chief Executive Innes Willox.

Food and beverage producers led the way supported by strong showings from businesses in the petroleum, coal, chemicals; metal products; and machinery and equipment subsectors. While production and sales volumes were robust and employment also grew, the combination of cost pressures — notably energy costs — and strong competition in part due to the recent rise in the value of the Australian dollar continued to keep margins tight and restrain wage rises.

“Now is the opportunity for policymakers to reinforce the optimistic start to the year to secure further investment and employment gains in 2018,” said Willox.

January marked the 16th month of expanding or stable conditions for the Australian PMI — the longest run of expansion since 2005 — and for the third consecutive month all seven activity subindexes in the index expanded, with six accelerating their pace of growth.

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