Australia's manufacturing contraction eases in April: Ai Group
The Ai Group Australian Industry Index showed a slight improvement in April 2025, rising by 5.1 points to -15.0 (seasonally adjusted), though the index has remained in contraction for thirty-four consecutive months.
Activity indicators painted a mixed picture. The activity/sales sub-index rose by 7.1 points to -18.3, while employment worsened, falling 5.8 points to -18.2 — a reflection of persistent labour shortages and pre-election business caution. Respondents cited continued cost-of-living pressures and labour market tightness as key challenges.
Leading indicators, including new orders and input volumes, remained unchanged at -20.7 and -13.1 respectively, reflecting ongoing uncertainty in the domestic and global economic environment. Businesses reported holding off on investment and order placements amid fluctuating demand and geopolitical instability.
Inflationary pressures appeared to ease further. While the sales price indicator dropped to -6.3, signalling weakened pricing power, input prices and wages saw marginal adjustments, a release from the Ai Group said.
The wage price indicator rose 7.1 points to 39.8 but has remained largely steady since mid-2024. Businesses remain concerned about future price volatility stemming from US trade tensions and currency swings.
Australia's broader manufacturing sector (PMI) also saw a softer contraction in April, with the index rising by 3.7 points. However, upstream manufacturing faced headwinds, as the chemicals sub-sector fell to -9.8—its lowest level since January—due to global trade friction and rising material costs.
In downstream manufacturing, machinery and equipment fell sharply to -37.3, the lowest level since February 2021, amid supply chain bottlenecks and falling capital expenditure. Food, beverages and textiles saw the only improvement, rising 10.6 points to -16.6, though exports were hindered by high freight costs and tariff-related trade instability.
Capacity utilisation edged down to 78.4 per cent, its lowest since mid-2020, as businesses grappled with equipment constraints, input shortages, and election-driven uncertainty.
Australia's manufacturing sector (PMI) saw a softer contraction in April, rising by 3.7 points. However, upstream manufacturing remained under pressure as the chemicals sub-sector fell to -9.8, its lowest since January, impacted by global trade tensions and higher material costs. Broader industrial recovery remains fragile amid ongoing economic uncertainties.
Fibre2Fashion News Desk (HU)
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