Manufacturing Industry Update – February 2017

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How’d Australian manufacturing go in February 2017?

The industry association AI Group (Australian Industry Association) has released their latest survey results for February 2017.

Some very encouraging figures in their findings with the centrepiece being an overall performance index of 59.3. This is a huge 8.1 point increase on last month, and indicates strong expansion in this vital industry sector.

This is the fifth month in a row of continual expansion, and the best overall figure since May 2002 – nearly 15 years ago.

Let’s take a deeper look at what’s happening in each manufacturing sector.

Note: AI Group indicates results using an ‘index’ that has a default value of 50 points. Values of over 50 indicate expansion, while values under 50 indicate contraction (shrinking). The distance of the index from 50 indicates the strength of the expansion or contraction.

Food, Beverage and Tobacco

Food and beverage manufacturing is the largest manufacturing sector. Results indicate a further strengthening with another 1.8 point increase, with the index coming in at 58.8 points. It’s been in expansion territory for more than four years now.

Textiles, Clothing, Furniture and Other

This sector is small and quite diverse, and has been contracting (shrinking) for the last 12 months or so. In February however, the index has recovered to 52.8 points – indicating a small amount of expansion.

Wood & Paper

Another small sector, wood and paper manufacturing has continued its modest recovery in 2017. After contracting steadily at the end of 2016 and recovering in January, the index has now further improved to 51.9 points which indicates slight growth.

Printing and Recorded Media

Printing continues to be the worst performing sector in Australian manufacturing, with an index of 45.1 points in February. This is reflective of the ongoing difficult conditions in the industry relating to rapid technology changes and competition from imports.

Petroleum, Coal & Chemicals

Expansion has eased in this traditionally strong performing sector, sliding back to 53 points in February. Conditions seem to be cooling across the sector, particularly from declining exports.

Non-metallic Mineral Products

The non-metallic mineral products sector manufactures building materials such as glass, cement, bricks and tiles. On the back of strong demand from the construction industry, growth has continued to be very strong in February with a result of 66.3 points – the strongest performance of any sector.

Metal Products

One of the largest sectors, metal products have further recovered to a encouraging figure of 56.1 points in February, on the back of housing construction and stronger commodity prices.

Machinery and Equipment

Machinery and equipment has now been expanding for the last seven months; February’s result was a healthy 60.1 points. Increasing confidence and exports have contributed to this result.