Australia’s Performance of Manufacturing Index (PMI) has shown signs of slowing down in August, according to a report from the Australian Industry Group.
The index dropped by 3.2 points to 49.3 for the month, indicating a slight contraction. Readings below 50 points indicate slow expansion, with lower results indicating a faster rate of contraction.
In the report, the Ai Group said manufacturing fell short of growth for the first time in six months, with activity slowing down in all subsectors except for chemicals and the diverse textiles, clothing, footwear, paper and printing.
“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,” said Innes Willox, chief executive officer of Ai Group.
Australian PMI also cited labour challenges and supply chain disruption that continue to plague the industry 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,” the Ai Group said in a statement.
Meanwhile, wages skyrocketed, indicating labour shortage pressures.
Exports also declined further while businesses reported volatile export demand.
Willox said further slowing in manufacturing is more likely to be seen over the coming months as the Reserve Bank seeks to raise interest rates to ease the pressures posed by steep prices and wages.
