Australia Manufacturing Shrinks for 2nd Straight Month

The S&P Global Australia Manufacturing PMI inched up to 49.7 in October 2026 from a 21-month low of 49.6 in September, preliminary estimates showed. It marked the second straight month of contraction in the manufacturing sector, driven by a steeper fall in new orders, while foreign demand reported a less pronounced decline. Weakened demand was driven by a lack of market confidence, rising borrowing costs, and general inflationary pressures at the start of the fourth quarter. Purchasing activity continued to fall in line with new orders, with delivery times worsening further. On the price front, input cost inflation accelerated due to higher energy, shipping, commodity, and wage costs. In response to rising input prices, output costs rose as firms opted to pass on their increased cost burdens to clients. Looking ahead, business sentiment remained positive.

The S&P Global Australia Manufacturing PMI fell to 49.6 in September 2026, above the preliminary estimate of 49.3 but down from 52.0 in August. This marked the sharpest decline in 21 months, driven by a renewed fall in new orders, which decreased for the first time in three months amid intense competition, rising prices and weaker demand. New export orders also contracted after rising in August. As a result, output fell at the fastest pace since December 2024, while manufacturing employment declined for the first time in five months. Backlogs fell for the 17th straight month. Firms also reduced purchasing activity at the fastest pace in four months. Supplier delivery times lengthened further due to Middle East shipping disruptions and severe weather in North Asia. Input cost inflation eased slightly but remained elevated, due to higher raw material, oil and transport costs, while output price inflation slowed to its weakest in seven months. Business confidence fell to a four-month low.

The S&P Global Australia Manufacturing PMI fell to 49.3 in September 2026 from 52.0 in August, according to flash estimates, marking the first contraction since March. Manufacturing output fell to 46.4 from 49.6, the strongest decline in 21 months, as new orders weakened and export demand remained soft. New export orders declined for the fifth time in six months, while manufacturers reported greater supply-chain pressure as input delivery times lengthened again. On the pricing front, input cost inflation eased from August despite higher energy and fuel costs linked to the Middle East conflict, while output price inflation remained elevated. Business confidence also deteriorated to a three-month low amid concerns over economic conditions, costs, demand and customer retention.