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Australia PMI May 2024

Australia: Manufacturing PMI rises in May

The Judo Bank Australia Manufacturing Purchasing Managers’ Index (PMI) rose to 49.7 in May from 49.6 in April. As a result, the index remained below the 50.0 no-change threshold, but signaled a softer deterioration in manufacturing-sector operating conditions compared to the previous month.

The modest improvement in the PMI was primarily driven by slower rates of decline in manufacturing production and new orders. Notably, new export orders increased for the first time since late 2022, contributing to a rise in employment levels and an accumulation of finished goods for the first time in five months. However, purchasing activity continued to contract in line with the overall falls in new orders and production, and preproduction stock holdings declined further.

Price pressures in the Australian manufacturing sector intensified in May, with both input costs and output charges rising at the fastest rates in 18 and 14 months, respectively. This was attributed to higher raw material and financing costs, as well as increased transport costs due to disruptions in the Red Sea and supply shortages. Sentiment among Australian manufacturers remained positive, driven by expectations of better market conditions, new product launches, and marketing efforts. However, the level of confidence eased to a six-month low, reflecting concerns over heightened competition and rising prices.

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