Australian Manufacturing May Continue Growth Streak Until 2018

car manufacturerAustralia’s manufacturing sector has been growing consistently for 14 consecutive months, based on Ai Group’s Performance of Manufacturing Index. The index increased by 6.2 points and up to 57.3 points in November.

Since September 2016, it has recorded a reading above 50 that indicates an expansion in business and activity.

An increase not just bodes well for the economy, but also uplifts demand for packaging equipment solutions – a service provided by firms such as Packline Solutions – among manufacturers to accommodate new orders.

Index Growth

Ai Group said that the index’s reading in November marked a rebound in activity from sluggish growth in October and September. Part of the reason for the slowdown during these months involved the “final closure of automotive assembly and a slightly higher Australian dollar” in the third quarter, according to the company.

Only five out of seven industries went through an expansion in November. Food and beverage manufacturing rose further, yet non-metallic minerals declined, according to the index. However, new exports posted strong growth in November.

These two segments influence outlook for production in the first few months of 2018.

Market Outlook

Manufacturers should be positive about a higher consumer confidence in 2018 when the federal government plans to impose tax cuts on personal income and for all businesses.

The Australian Chamber of Commerce and Industry-Westpac industrial trends survey aligned with the results of Ai Group’s index, as the former showed that production and new orders have continued to grow in the fourth quarter of 2017.

December’s results, for instance, indicated that the public and private sectors spend more on state infrastructure and private non-mining projects, according to Westpac senior economist Andrew Hanlan said.

Conclusion

It remains to be seen whether or not 2018 will shape up to be a generally positive year for Australia’s manufacturing sector. However, the current pace of activity may indicate that growth may be sustained in the next few months.

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