Manufacturing ends 2015 on a high note

The Australian manufacturing sector expanded for a sixth straight month in December, continuing the longest run of expansionary readings since 2010.

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) dropped by 0.6 points to 51.9, but remained well above the 50 mark which separates expansion from contraction.

“The further expansion of Australian manufacturing in December capped a strong second half of 2015,” said Ai Group Chief Executive, Innes Willox.

“After the extended weakness the sector has experienced over the past five years, this is a most welcome turnaround.”

Data showed that five of the eight manufacturing subsectors expanded, including wood and paper products, petroleum, coal, chemical & rubber products, non-metallic mineral products, food & beverages and printing & recorded media.

On the down side, the machinery and equipment, metal products, and textiles, clothing, footwear, furniture & other sub-sectors all shrunk in December to remain in contractionary territory.

Ai Group’s report also noted that of the seven activity subindexes, new orders (up 2.1 points to 55.3) and exports (down 1.5 points to 54.9) posted strongly positive results, which bodes well for further expansion in 2016.

“With export growth solid and production, sales and new orders all on the rise, there is now a very good base from which manufacturers can launch a prosperous 2016,” Mr Willox said.

“That said, declines in automotive assembly, the ongoing contraction of mining investment and tough conditions in global metals markets continue to constrain the growth of the sector and its role in rebalancing the Australian economy.”