Australia Factory Activity Seen Expanding for 3rd Month

The S&P Global Australia Manufacturing PMI fell to 51.5 in February 2026 from 52.3 in January, according to flash estimates, signaling continued expansion but at a slower pace. The moderation reflected softer growth in new orders and output, as overall new business cooled from January’s 45-month high and export demand increased only marginally. Manufacturers noted a loss of momentum alongside broader private sector slowing. Optimism about output over the next year remained positive, supported by expansion plans and expectations of improved demand, though confidence eased to its lowest level in just over a year-and-a-half amid concerns about economic conditions and elevated competition. Firms continued hiring, but manufacturing employment growth was the weakest in four months and backlogs were unchanged. Input costs rose at the fastest pace in ten months on higher supplier and raw material prices, while selling price inflation accelerated to its highest since September last year.

The S&P Global Australia Manufacturing PMI was slightly revised lower to 52.3 in January 2026 from a preliminary estimate of 52.4, following a final reading of 51.6 in December. The latest reading remained the fastest expansion in factory activity since August, as output and new orders rose at a faster pace, supported by foreign demand. In response to rising new work inflows, firms continued to raise their staffing levels, with the pace of employment growth notably the strongest in almost three years. Purchasing activity rose for a third straight month, while vendor performance deteriorated due to transportation delays, port congestion, and material shortages. On prices, input cost inflation accelerated to a nine-month high due to higher raw material prices. As a result, output prices rose as firms sought to pass on costs to customers. Finally, business sentiment strengthened to its highest level in nearly four years, amid hopes of higher sales supported by economic growth.

The S&P Global Australia Manufacturing PMI rose to 52.4 in January 2026 from 51.6 in December, according to flash estimates, signaling continued expansion. The improvement was driven by renewed growth in new orders and output, with both goods and services new business increasing and a renewed rise in overseas new orders for manufactured goods helping to support overall demand. Looking ahead, optimism about output over the next year remained positive, underpinned by expansion plans and expectations of improved economic conditions that could lift sales. In response, manufacturers increased hiring, although the overall rate of employment growth softened versus December, and outstanding workloads rose marginally for the first time in nine months. Purchasing activity picked up and average input costs increased, while selling price inflation softened overall from December even as rising manufacturing input prices were flagged as a risk for inflation to intensify again.