The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) increased by 1.0 point to 56.0 in July – a tenth consecutive month of expansion for the manufacturing sector.

Six of the seven activity sub-indexes in the Australian PMI expanded in July with new orders (down 3.7 points to 55.8) and sales (down 5.1 points to 55.8) continuing to expand, albeit at a slower pace, while employment bounced back into positive territory (up 8.4 points to 57.4). Readings above 50 indicate expansion in activity, with the distance from 50 indicating the strength of the increase.

Six of the eight manufacturing sub-sectors expanded strongly in July (according to trend data), led by non-metallic mineral products (up 1.9 points to 67.3), wood & paper products (up 1.7 points to 67.0) and machinery & equipment (down 0.7 points to 58.0). The textiles, clothing, furniture & other manufacturing sub-sector fell deeper into contraction (down 0.2 points to 34.7) while printing & recorded media ended its recent recovery, slumping 4.4 points to 47.9.

The input prices sub-index increased a further 4.4 points to 69.3 in July, while wages dropped 4.7 points to 55.7, dipping below its six-month average (58.1 points). The selling prices sub-index increased by 2.9 points to a neutral 50.0 in July, with manufacturers seemingly limited in their ability to pass through continued increases in energy, input costs and wages.

“The broadly-based expansion of manufacturing continued in July with the sector contributing positively to the rebalancing of the broader economy,” said Ai Group Chief Executive Innes Willox. “Production, sales, exports and employment all grew during the month, in part thanks to the strength of other key sectors including construction and agriculture, and the recovery of spending in the mining sector. These growth opportunities more than offset the further decline of automotive assembly. They are also, at least for the time being, helping to mitigate the growing threats from unrelenting energy price rises and a higher dollar.”