Australia Industry Conditions Rebound

Australia’s Industry Index plunged to -24.2 in September from a revised -1.6 in the previous month, underscoring mounting uncertainty as volatile prices and market conditions stifle investment, orders, and planning. Firms reported growing difficulty accessing finance, while cost pressures stayed high amid a second wave of fuel and downstream price rises that reignited inflation. The activity/sales indicator collapsed 28.5 points to -31.0, returning to deep contraction, and employment fell back into negative territory at -15.6, erasing August’s gains. New orders fell 22.4 points to -35.9, reversing prior gain, while input volumes weakened to -12.9. Input prices eased 10.6 points to 56.8, yet sales prices rose 13.0 points to 13.6, hinting at improved cost pass-through. The gap between input and sales prices remained wide at 43.2 points, leaving margins under strain despite partial relief. Capacity utilisation eased to 77.2% despite rising costs, labor shortages, and intense competition.

Australia’s Industry Index surged to -3.5 in August from a revised -26.3 in the prior month, its highest since February, signaling a sharp rebound in business conditions. Construction and business services led the recovery, buoyed by data centre projects. Activity and sales jumped 31.2 points to -2.2, new orders rose 15.9 points to -14.9, and employment gained 24.9 points to 3.0, all at their strongest since the energy crisis began. Firms reported mixed fortunes: some secured contracts and project wins, while others faced weaker sales and enquiries. Input volumes remained constrained by supply-chain disruptions, elevated costs, and geopolitical uncertainty. Pricing indicators diverged: input prices climbed 10.8 points to 68.0, while sales prices fell 13.1 points to 0.2, leaving a record 67.8-point margin gap. Average wages rose 16.9 points, reflecting annual increases at the start of the new financial year, underscoring persistent labor cost pressures despite headline improvement.

Australia’s Industry Index stood at -29.9 in July 2026, little changed from -30.0 in June. The easing energy crisis offered limited relief, but elevated fuel costs continued to pressure operations. New orders improved slightly, rising 3.7 points to -32.8, while input volumes fell 6.1 points to -9.1, staying mildly contractionary on trend. Activity and sales dropped further to -34.8, reflecting subdued demand and restrained investment amid high costs. Employment eased to -23.0 after a volatile H1 2026, as firms grappled with labour shortages and rising wages. Cost pressures showed signs of relief: input prices slid 18.9 points to 53.9 from June’s record high, while sales prices eased to 15.1, suggesting stabilising price growth after Q2 volatility. Capacity utilisation edged up to 74.0%, though businesses continued to cite many challenges, including raw material, fuel and freight costs, regulatory burdens, labour shortages, weak capital investment, and rising land taxes.