Australia's manufacturing sector showed a slower pace of contraction in November, with new orders and production declining more modestly, as indicated by the S&P Global Australia Manufacturing PMI. The headline index increased to 49.4, a rise from October's 47.3, reflecting the mildest decline observed in six months.
Data from S&P Global demonstrated that both manufacturing production and new orders continued their decline for the 24th month in a row, although the speed of contraction has eased. Demand remained subdued, influencing both domestic and export activity. On a positive note, business confidence experienced a significant boost, reaching its highest level since January 2023, with 43% of surveyed companies optimistic about future output in the upcoming year.
For the first time in six months, employment within the sector showed an increase, signaling improved sentiment among manufacturers. Nevertheless, caution remained prevalent concerning inventories and purchases, as businesses hesitated to accumulate stock due to prevailing uncertainties in demand.
Additionally, inflationary pressures continued to soften, with selling price inflation registering its lowest level in more than four years and input cost inflation reaching its second-lowest point since 2016. However, ongoing supply chain disruptions, notably delays in the Red Sea and throughout Asia, have extended lead times and contributed to increased cost pressures..