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Australia's Manufacturing Sector Expands in June Despite Weak Demand, Rising Prices

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Australia's Manufacturing Sector Expands in June Despite Weak Demand, Rising Prices

Australia's manufacturing sector expanded in June despite a continued decline in output and new orders amid market uncertainty and rising prices.

The headline seasonally adjusted S&P Global Australia Manufacturing Purchasing Managers' Index rose to 51.5 in June from 50.7 in May, being above the no-change mark of 50 for the third consecutive month and at its highest level since January.

S&P's report showed that Australian manufacturing firms increased their staffing levels while struggling to acquire new business amid reports that uncertainty and rising prices had limited demand.

The fall in new orders and decline in production for the fifth consecutive month, albeit at a softer pace than before.

Concerns over timely material supplies prompted manufacturers to increase input inventories in June. Pre-production stocks rose for the second time in three months, reaching their highest level since September, while purchasing activity edged lower.

Hopes of improving geopolitics and stronger new orders have lifted confidence in the year-ahead manufacturing outlook, according to S&P, as sentiment rose to a four-month high in June but remained below pre-Middle East war levels.

According to the Australian Bureau of Statistics, more manufacturing firms experienced supply chain disruptions in June compared to May, as ABS's June business conditions and sentiments survey showed that almost half of Australian businesses saw increased operating expenses.

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