Australian Industry Activity Declines: Ai Group

The Ai Group Australian Industry Index edged up 0.2 points to -12.3 seasonally adjusted in December/January. The indicator has continued to recover through 2025, but activity remains mixed. Domestic demand remained subdued amid seasonal challenges, while economic uncertainty, rising input costs, regulatory pressures and labour shortages continued to weigh on activity, partly offset by stronger construction inquiries and improved conditions in metals and food industries. The employment index was broadly stable at -4.7, reflecting ongoing difficulties in securing suitable staff, with some firms scaling back operations and others holding vacancies amid persistent skill shortages. New orders improved in December/January, rising 4.1 points to -14.2 as the 2026 work pipeline began to flow through, while input volumes fell slightly to -15.7, contracting at a similar pace to November. Pricing indicators eased modestly, with both input and sales prices declining, while wages remained elevated.

The Ai Group Australian Industry Index declined 0.6 points to -12.5 seasonally adjusted in November. The indicator has continued to recover through 2025, but activity remains mixed. Domestic and some export demand was subdued and customer hesitation, project delays, weather impacts and increased offshore sourcing offset gains in parts of the economy. The employment index fell 5.9 points to -5.9, reversing October’s gains, as firms typically chose not to replace leavers and widespread skill shortages continued to limit productivity while some firms shelved vacancies. New orders and input volumes both deteriorated in November, but trend data show the recovery in new orders has stalled since June—respondents cited erratic demand, fewer enquiries, project delays and rising offshoring. Pricing indicators point to re-emerging cost pressures: the input price indicator rose 6.3 points, while sales prices and wages were broadly steady as more firms sought to pass on higher input costs.

The Ai Group Australian Industry Index improved by 4.2 points to -11.2 seasonally adjusted in October. The indicator has continued to improve through 2025, but activity remains mixed. Domestic and some export demand was subdued and customer hesitation, project delays, weather impacts and increased offshore sourcing offset gains in parts of the economy. The employment index rose 10.9 points to a neutral reading of 0.0, led by eased labour supply constraints in construction, though widespread skill shortages still limit productivity and some firms are shelving vacancies. New orders held steady in October while input volumes climbed, but trend data show the recovery in new orders has stalled since June—respondents cited erratic demand, fewer enquiries and rising competition from imports. Pricing indicators were little moved: input costs rose slightly, sales prices eased slightly, and firms reported intensifying price competition even as some businesses began to pass on cost increases.