The Australian Industry Group’s industry index dropped by 3.6 points in April, hitting minus 8.9 points, signaling contraction for the past 24 months. The sales indicator also fell by 3.6 points to the same level, remaining negative for 22 months. The industrial activity indicator hit a low at the start of the year but has since been on the rise in early 2024.
The employment indicator dropped by 2.2 points in April, staying positive at 2.0. Recruitment challenges for skilled labour and low sales conversions were reported. New orders decreased by 3.1 points to minus 20, indicating significant contraction despite a recovery trend since the new year. Employment has been strengthening since winter, but challenges persist in the construction sector.
In April, input volumes showed improvement and have returned to neutral in trend terms. Supply chain disruptions persist for businesses, with lower purchasing demand due to falling new orders and input volumes. Growth in input prices and wages indicators slowed, while sales prices increased slightly. The Australian PMI dropped further into contraction in April but has been slightly improving in trend terms since 2024.
Manufacturers are experiencing increases in input and utilities costs along with weak market demand and slow export orders in some regions. Australian industry saw a slight decrease in capacity utilization to 80.2% in March, following a trend of 79-82% throughout 2023. High capacity utilization is still affected by supply-side constraints, especially in the labour market.
