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Australia's manufacturing sector is doing well -- and that looks set to continue

Photo by CBS via Getty Images

Australia’s manufacturing sector may be smaller than what it once was, but the parts that remain are currently doing well.

That point was reinforced by the Ai Group’s Performance of Manufacturing Index (PMI) which jumped by 6.2 points to 57.3 in November.

This PMI measures changes in activity levels across Australia’s manufacturing sector from one month to the next. Anything above 50 signals that activity levels are improving while a reading below suggests they’re deteriorating. The distance away from 50 indicates how quickly activity levels are expanding or contracting.

So at 57.3, November’s reading indicates that not only did activity levels improve last month, they did so at a faster pace than October.

The index has now held above 50 for 14 consecutive months, the longest continuous expansion since 2005.

Source: Ai Group

“November signaled a stronger pace of growth, after two months of relatively slower growth in September and October coinciding with the final closure of automotive assembly and a slightly higher Australian dollar in Q3,” the Ai Group said.

Adding to the positive headline result, the group said that all seven activity sub-indexes expanded in November, including very strong results for new orders and exports, two lead indicators that bode well on the outlook for activity levels in early 2018.

Here’s the breakdown on how each component fared in November.

Source: Ai Group

By sector, the performance was not quite as spectacular with only five of eight industries expanding over the month.

“The very large food and beverages sub-sector strengthened further, but non-metallic minerals
weakened, following a strong period of demand for building products earlier in 2017,” the Ai Group said.

“Participants said demand from residential construction was tailing off in November. Other participants noted stronger demand for equipment, machinery and other inputs or Government projects and procurement, agriculture, renewable energy projects and the local leisure market.”

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