Australian manufacturing activity improved modestly in June, with employment and inventories rising even as output and new orders continued to contract amid elevated costs, supply-chain delays, and uncertainty driven by Middle East tensions, according to a survey by S&P Global published Wednesday.
The headline seasonally adjusted S&P Global Australia Manufacturing Purchasing Manager's Index (PMI) rose to 51.5 in June from 50.7 in May, signaling a third consecutive month of expansion in the sector.
The headline PMI showed a modest monthly improvement, driven by higher employment and inventories and a further lengthening of suppliers' delivery times.
New orders and output continued to decline in June, though the pace of contraction eased as export demand returned to growth despite ongoing client uncertainty and price pressures, per the report.
Manufacturing output fell for the fifth straight month in June, as weaker new orders, a broader economic slowdown, and rising prices weighed on output, though the rate of decline eased to a marginal pace.
Prices continued to climb amid the ongoing fallout from the Middle East conflict, though the pace of inflation eased compared with May as input cost pressures began to moderate.
Supply-chain pressures intensified again in June as the ongoing Middle East conflict extended lead times, prompting manufacturers to stockpile inputs even as purchasing activity edged lower.
Manufacturers added staff for a second consecutive month in June as firms replaced departing workers and prepared for new projects, even as new orders fell and backlogs were reduced further.
Manufacturing confidence climbed in June to a four-month peak, supported by hopes of improved geopolitical conditions and increased new orders, though it stayed below levels seen before the Middle East conflict began.