Australia Factory Activity Seen Stagnating

The S&P Global Australia Manufacturing PMI was revised higher to 50.7 in May 2026 from 50.2 in the preliminary estimate, after 51.3 in April. However, the latest reading was still lower than the previous month's level as output contracted for the fourth consecutive month, while new orders fell at the steepest pace since last October, with new export orders also declining solidly. Meanwhile, employment increased for the first time in three months, although job creation was only marginal. Delivery times lengthened to the second-largest degree in 46 months, amid ongoing war in the Middle East. On prices, input cost inflation eased slightly but remained the second-fastest in nearly four years, driven by higher fuel and transportation costs. Meanwhile, output price inflation accelerated to its fastest pace since August 2022. Finally, business sentiment ticked up amid hopes of improvement in new orders over the coming year.

The S&P Global Australia Manufacturing PMI declined to 50.2 in May 2026 from 51.3 in April, preliminary data showed. The decline came as output contracted for the fourth consecutive month, while employment also declined. Meanwhile, delivery times lengthened by the second-largest extent in nearly four years due to vessel delays, material shortages, and higher fuel prices amid the ongoing Middle East conflict. Purchasing activity returned to contraction, falling at the sharpest pace in 15 months. On prices, input prices continued to fall, while output prices increased.

The S&P Global Australia Manufacturing PMI stood at 51.3 in April 2026, higher than flash data of 51.0 and March's reading of 49.8. However, the latest result largely reflected a substantial lengthening of delivery times due to the war in the Middle East and delays in international freight, rather than stronger underlying demand. Firms lifted purchasing and rebuilt inventories for the first time in seven months, signaling precautionary stockpiling. Meanwhile, output fell at the steepest pace in 16 months, and new orders declined again as exports slipped for the first time in four months. Employment contracted for a second month, with backlogs and finished goods inventories shrinking further. Input costs surged at the fastest rate since March 2022 due to higher fuel prices, while output price inflation accelerated to near-record levels. Lastly, business mood weakened for a third month, hitting its lowest since July 2024 under persistent geopolitical risks and mounting cost pressures.