Australia Factory Activity Seen Stagnating

The S&P Global Australia Manufacturing PMI fell to 50.1 in March 2026 from 51.0 in February according to flash estimates signaling a near stabilization of the sector. The moderation reflected a fractional dip in output and the first fall in new orders since July 2024 although export demand increased at the strongest pace in over three and a half years. Manufacturers noted a loss of momentum alongside the first private sector output contraction in eighteen months. Optimism about output over the next year remained positive though confidence eased to a 20 month low amid concerns about demand fragility and supply chain disruption from the Middle East war. Firms reduced their workforce with manufacturing employment recording the strongest round of job losses since October 2024 and backlogs being depleted for the first time this year. Input costs rose at the fastest pace in three and a half years while selling price inflation accelerated to its highest since August 2023.

The S&P Global Australia Manufacturing PMI was revised lower to 51 in February 2026 from a preliminary of 51.5, the lowest reading in four months, compared to 52.3 in January. The reading showed that manufacturing conditions improved at a softer pace and manufacturing sector expansion softened. Incoming new orders from both domestic and foreign sources rose at slower rates, which led to a mild contraction in output. Also, employment growth decelerated amid an absence of capacity pressure, while inventory levels fell alongside a loss of confidence. Meanwhile, supply conditions further worsened in February, though rates of inflation eased slightly since the start of the year.

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.