®

NoVEMBEr 2012
AuStrAlIAN PMI®
NOV

MANufACturINg CoNtrACtS furtHEr IN NoVEMBEr
KEy fINdINgS
■ Manufacturing activity contracted for the ninth consecutive

65 60 55

AUST

43.6

50 45 40 35

Diffusion Index (Points)

■ ■

EurozoNE PMI

month in November, with the seasonally adjusted Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) recording a level of 43.6 (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease). This was a drop of 1.6 points compared to the previous month. The slump in manufacturing new orders also extended into a ninth month, reflecting weak global demand and a softening Australian economy. The new orders sub-index dropped a further 0.4 points to 43.5 in November. The manufacturing production sub-index remained firmly in the red, at 44.8 in November, down from 45.2 in October. Although only the food & beverages sub-sector expanded in November, the contraction in the textiles, clothing & footwear; wood products & furniture; and machinery & equipment sub-sectors eased considerably. Survey respondents remained cautious about the outlook. They cited a range of inhibitors including: soft demand; higher energy charges; stronger import competition; and the strong Australian dollar. Wages and input costs continued to rise in November, while the persistent decline in selling prices eased only slightly, indicating that the profits for manufacturers remain under pressure.

60 55 50 45
Increasing

OCT

30

OCT

65 60

uSA ISM PMI

Decreasing

40 35 30 25 20
Feb 09 May 09 Nov 09 Feb 10 May 10 J Nov 10 Feb 11 May 11 Nov 11 Feb 12 May 12 Aug 09 Aug 10 Aug 12 Nov 12 Aug11

51.7

55 50 45 40 35

USA

SEP

30

Australian PMI®

3 month moving average

OCT

65 60 55

EURO

45.4

50 45 40 35

SECtorS
■ Seasonally adjusted activity increased only in the food &

Decreasing

Increasing

Food & beverages Textiles, clothing & footwear Wood products & furniture Paper, printing & publishing Chemicals, petroleum, etc Construction materials Basic metals Fabricated metals Transport equipment Machinery & equipment Miscellaneous TOTAL

beverage sub-sector in November. ■ The contraction of activity in the textiles, clothing & footwear; wood products & furniture; and machinery & equipment sub-sectors eased considerably, while the chemical, petroleum and coal products; construction materials; basic metals; and fabricated metals sub-sectors all recorded significant declines in activity.

SEP

30

OCT

65 60

JAPANESE PMI

55

46.9

50 45 40 35

0

10

20

30

40

50

60

70
Nov 12

80

90

100

JAPAN

Diffusion Index

Oct 12

ProduCtIoN ANd CAPACIty utIlISAtIoN
■ Seasonally adjusted, the production sub-index decreased by

SEP

70 65
Production Diffusion Index (Points) Capacity Utilisation

80

30

40 35 30 25 20
Feb 09 May 09 Aug 09 Nov 09 Feb 10 May 10 Aug 10 Nov 10 Feb 11 May 11 Aug11 Nov 11 Feb 12 May 12 Aug 12 Nov 12

CHINESE PMI

0.4 points to 44.8 in November, in an eighth consecutive month of decline in manufacturing output. ■ Production expanded in three out of the 11 sub-sectors this month, unchanged from October. Strong increases were reported in the food & beverages and wood products & furniture sub-sectors. ■ There were significant declines in production in the paper, printing & publishing; construction materials; and basic metals sub-sectors. ■ Capacity utilisation for all manufacturers decreased slightly to 73.3% in November.

60 55 50 45

Capacity Utilisation (%)

75

OCT

65 60

70

49.5

55 50 45 40 35

65

CHINA

60

SEP

30

NEW ordErS ANd ExPortS
■ In seasonally adjusted terms, the new orders sub-index decreased

65 60 55
Diffusion Index (Points)
Increasing

by 0.4 points to 43.5 points in November, bringing the decline in new orders into a ninth consecutive month. ■ Unadjusted, new orders expanded in three of the 11 sub-sectors in November, unchanged from October. These expanding sub-sectors included: food & beverages; paper, printing & publishing; and wood products & furniture. ■ New orders in the food & beverages sub-sector have increased strongly in the past five months. ■ Reflecting weakness in the global economy, manufacturing exports recorded another month of significant decline, albeit at a more moderate pace. The exports sub-index rose 5.9 points to 35.6 in November, marking the ninth consecutive month of contraction.

WHAt IS tHE AuStrAlIAN PMI®?
The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) is a seasonally adjusted national composite index based on the diffusion indices for production, new orders, deliveries, inventories and employment with varying weights. An Australian PMI® reading above 50 points indicates that manufacturing is generally expanding; below 50, that it is declining. The distance from 50 is indicative of the strength of the expansion or decline. Survey results are based on a rotating sample of manufacturing companies each month. More information can be obtained from the Ai Group website www.aigroup.com.au.

50 45
Decreasing

40 35 30 25 20 15
Aug 09 Aug 10 Aug11 May 09 May 10 May 11 May 12 Aug 12 Feb 09 Nov 09 Feb 10 Nov 10 Feb 11 Nov 11 Feb 12 Nov 12

Exports

New Orders

EMPloyMENt ANd AVErAgE WAgES
Average Wages Diffusion Index (Points)

75 70 65 60 55 50 45 40 35 30 25 20
Aug 09 Aug 10 Aug11 May 09 May 10 May 11

Average Wages

75 70 65 60
Employment Diffusion Index (Points)

■ The seasonally adjusted employment sub-index decreased 5.0

May 12

Aug 12

Feb 09

Nov 09

Feb 10

Nov 10

Feb 11

Nov 11

Feb 12

Nov 12

points to 41.7 in November. This was the eighth consecutive month of contracting employment in manufacturing. ■ Employment expanded in two sub-sectors in November: the food & beverages and paper, printing & publishing sub-sectors. ■ Employment declined strongly in the chemicals, petroleum & coal products; basic metals; fabricated metals; transport equipment; and miscellaneous manufactures sub-sectors. ■ Although conditions facing manufacturing remain difficult and employment has been falling, relatively strong wages growth continued in the manufacturing sector in November.

Employment

55 50 45 40 35 30 25 20

CoNtACt
Innes Willox Chief Executive Ai Group Tel 03 9867 0111

fINISHEd StoCKS ANd dElIVErIES
■ Manufacturing inventories contracted again in November, with

65 60
Diffusion Index (Points)
Increasing

■ ■

a fall in this sub-index to 44.4 points in November compared with October (seasonally adjusted). Inventories increased most strongly in the construction materials sub-sector and decreased markedly in the basic metals sub-sector. Supplier deliveries contracted for a ninth consecutive month in November, as the sub-index decreased by 1.2 points to 43.9 in November. Despite the fall in the deliveries sub-index for manufacturing as a whole, deliveries increased in three of the 11 sub-sectors, including food & beverages; wood products & furniture; and construction materials. Among the other sub-sectors, the basic metals; fabricated metals; transport equipment; and machinery & equipment sub-sectors recorded significant decreases in deliveries.

55 50 45 40 35 30
Feb 09 May 09 Nov 09 Feb 10 May 10 Nov 10 Feb 11 May 11 Nov 11 Feb 12 May 12 Aug 09 Aug 10 Aug 12 Nov 12 Aug11

INtErNAtIoNAl PMI dAtA

Decreasing

Markit Economics www.markiteconomics.com

Deliveries

Finished Stocks

INPut CoStS ANd SEllINg PrICES
■ The increase in input costs gained pace again in November, with

90 80
Diffusion Index (Points)

the seasonally adjusted sub-index rising 1.8 points to 61.7. Strong increases in input costs were recorded in most sub-sectors. ■ Selling prices continued to fall in November albeit at a slower rate compared to a month ago. The selling prices sub-index increased 1.0 point to 40.6. This falling trend in selling prices indicates that widespread price discounting is probably occurring, as manufacturers seek to compete globally in a very weak demand environment.

70 60 50

Decreasing

40 30 20
May 09 May 10 May 11 May 12 Feb 09 Aug 09 Nov 09 Feb 10 Aug 10 Nov 10 Feb 11 Aug11 Nov 11 Feb 12 Aug 12

Increasing

CIPS Australia www.cipsa.com.au

Input prices

Selling prices

© The Australian Industry Group, 2012 This publication is copyright. Apart from any fair dealing for the purposes of private study or research permitted under applicable copyright legislation, no part may be reproduced by any process or means without the prior written permission of The Australian Industry Group. Disclaimer – The Australian Industry Group provides information services to its members and others, which include economic and industry policy and forecasting services. None of the information provided here is represented or implied to be legal, accounting, financial or investment advice and does not constitute financial product advice. The Australian Industry Group does not invite and does not expect any person to act or rely on any statement, opinion, representation or interference expressed or implied in this publication. All readers must make their own enquiries and obtain their own professional advice in relation to any issue or matter referred to herein before making any financial or other decision. The Australian Industry Group accepts no responsibility for any act or omission by any person relying in whole or in part upon the contents of this publication.
AIG12433

AuStrAlIAN PMI®
AuStrAlIAN PMI® ProduCtIoN EMPloyMENt NEW ordErS INVENtorIES SuPPlIEr dElIVErIES INPut PrICES ExPortS SEllINg PrICES AVErAgE WAgES

Nov 2012 43.6 44.8 41.7 43.5 44.4 43.9 61.7 35.6 40.6 61.1 73.3

Oct 2012 45.2 45.2 46.7 43.9 46.5 45.1 59.9 29.6 39.6 59.4 73.6

Monthly Change -1.6 -0.4 -5.0 -0.4 -2.1 -1.2 1.8 6.0 1.0 1.7 -0.3 pts

Direction Contracting Contracting Contracting Contracting Contracting Contracting Expanding Contracting Contracting Expanding Decrease

Rate of Change Faster Faster Faster Faster Faster Faster Faster Slower Slower Faster –

Trend** (Months) 9 8 8 9 2 8 126 9 20 43 –
®

CAPACIty utIlISAtIoN (%)

Further Information Results are based on responses from over 200 companies from a rotating sample of manufacturers. An evaluation of the Australian PMI as well as other economic research and analysis can be obtained from the Ai Group website at http://www.aigroup.com.au/economics. Results for capacity utilisation, average wages and output prices to June 2007 based on quarterly surveys. From this point data will be collected in the monthly PMI survey. ** Number of months moving in current direction. New monthly seasonal adjustment factors were applied in April 2012. Visit http://www.aigroup.com.au/economics for further economic analysis and information.

Nov 12

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