The contractionary phase of the Australian industry showed signs of easing in February 2024, according to the latest Ai Group Australian Industry Index. The index, which has been signalling contraction for 22 consecutive months, improved by 12.4 points to reach minus 14.9 points, still underlining a contraction in the sector.

Notably, the new orders and sales indicators saw significant improvements in February, reversing the declines seen over the New Year period, though both indicators remained in negative territory.

Price indicators continued to rise slightly, suggesting that inflation in industrial products remains a widespread issue. This ongoing inflationary pressure is reflected in the elevated but slightly eased pricing indicators, maintaining the gap between input and sales prices and indicating sustained margin pressures.

The Australian purchasing managers’ index (PMI) (all manufacturing) also improved by 11.2 points but still indicated contraction at minus 12.6 points. Manufacturers reported a quiet February, with only ongoing large projects making significant contributions.

The employment indicator fell further into contraction to minus 10.1 points, reflecting challenges such as difficulty in hiring skilled personnel, lower customer demand, and uncertainties about future demand.

Despite the contraction in new orders softening, this indicator remained negative at minus 16.4 points. The input volumes indicator also fell, continuing its negative trend since May 2021, except for a brief positive spell in 2023.

Capacity utilisation in the Australian industry slightly decreased to 77.3% in February, continuing a downward trend from the previous year. This historically high level of capacity utilisation still reflects supply-side constraints, particularly in labour supply. However, with improvements in new orders, there is an expectation that capacity utilization may increase in the coming months.

Fibre2Fashion News Desk (DP)

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