Australia Manufacturing Sector Deteriorates Further: Ai Group

The Ai Group Industry Index for Australia’s manufacturing sector remained in contraction in December/January, with overall manufacturing conditions still weak. Manufacturing trends were mixed, as subdued demand, tariffs, rising input and wage costs, weak cashflow and labour constraints continued to weigh on output, while limited pockets of improved orders offered only partial relief. The chemicals index fell sharply to -35.3 as seasonal slowdowns, market uncertainty and higher tariffs reduced sales. In contrast, minerals and metals improved to -25.9, supported by cheaper imported inputs and some lift in new orders, though softer holiday demand and export pressures persisted. The machinery and equipment index declined to -22.3 amid lower investment, higher costs, labour shortages and slower holiday orders, despite modest gains for some firms. Food, beverages and TCF eased to -9.4, with stronger festive-season sales offset by rising wage, input, energy and tax costs.

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.