Australia Manufacturing Contraction Eases: Ai Group

The Ai Group Industry Index for Australia’s manufacturing sector improved to -18.0 in November from -22 in October, but activity remained weak. Manufacturing trends were mixed with soft demand, rising costs and labour shortages weighing on output, while machinery orders and some export demand provided limited relief. The chemicals index rebounded to -19.9 as seasonal factors and stronger export sales helped, though cost and drought pressures persist. Minerals and metals edged down to -37.0 amid higher energy and wage costs and weak customer confidence. The machinery and equipment index improved to -7.9 driven by stronger orders, and food, beverages and TCF fell to -14.1 with rising input costs and weather related supply disruptions.

The Ai Group Industry Index for Australia’s manufacturing sector fell 8.8 points to -22 in October, showing further deterioration. Manufacturing trends have weakened, with soft demand, rising costs, and labor shortages weighing on activity, though exports and some stable order books provided limited relief. The chemicals index fell to -33.4 amid competition, skill shortages, drought impacts, and regulatory pressures. Minerals & metals declined to -35.4, affected by higher energy and wage costs, weak customer confidence, challenges exporting, and raw material disruptions. The machinery & equipment index declined to -21.0, driven by soft demand, delayed project releases, reduced freight-related orders, rising input costs, and an increased reliance on imported goods. Food, beverages, and TCF fell to -11.3 as firms faced rising energy and input costs and raw material supply disruptions from adverse weather, though some businesses still reported strong sales performance.

The Ai Group Industry Index for Australia’s manufacturing sector rose 7.6 points to -13.2 in September, showing slight improvement but remaining in contraction. Manufacturing trends have been steady, with soft demand, rising costs, and labor shortages weighing on activity, though exports and strong local orders provided some relief. Upstream indicators continued to contract: the chemicals index fell 5.1 points to -25.2 amid competition, skill shortages, drought impacts, and regulatory pressures, though export demand to the Middle East and Asia offered some support. Minerals & metals declined slightly to -15.9, affected by higher energy and wage costs, weak customer confidence, and raw material disruptions. The machinery & equipment index improved 11 points to -18.2, driven by new construction demand. Food, beverages, and TCF rose 16.3 points to -4.7, the highest since February, as firms increased orders and promotions, though slower trading and concerns over US tariffs persisted.