Growth in Australia’s manufacturing sector jumped in November, bouncing back from two months of slower expansion that coincided with the closure of the Holden and Toyota car plants.
The Australian Industry Group’s Australian Performance of Manufacturing Index rose by 6.2 points to 57.3 points in November – well above the 50-point level separating expansion from contraction, with growth in production, new orders and sales, exports, employment, supplier deliveries and inventories.
Ai Group chief executive Innes Willox, said the strong lift follows uninterrupted growth that began in October 2016 and bodes well for the new year.
“Sales, production and employment all jumped ahead in November and the strong rise in new orders points to further good news as we head to Christmas,” Mr Willox said.
Growth in food and beverage industries, as well as in petroleum, coal and chemicals fueled a strong rise in new orders in November.
According to the index, capacity utilisation across manufacturing was broadly unchanged at 74.9 per cent, while input prices hit their highest growth rate since March 2011, mainly on the back of rises in energy input costs and rising prices for imports against a lower Australian dollar.
“The sharp rise in input costs recorded in November is a sobering reminder of the risks posed for the manufacturing sector by climbing energy costs,” Mr Willox said.
Activity in major machinery and equipment manufacturing slowed in November, suggesting a lower but still healthy rate of recovery outside of automotive assembly which withdrew from production in Australia when Holden and Toyota closed in October.
Non-metallic mineral products also slid sharply into contraction in November after expanding through much of 2017, as the recent strong demand from residential construction fell away.