By James Glynn
SYDNEY – Activity in Australia’s manufacturing sector remained in a downturn in July, but signs of stabilization are beginning to emerge, according to the latest PMI data from Judo Bank.
Manufacturing PMI Sees Increase in July
The headline seasonally adjusted Judo Bank Australia Manufacturing Purchasing Managers Index (PMI) stood at 49.6 in July, up from 48.2 in June. This reading marks the highest level since February.
Slowdown in Manufacturing Activity Softens
Despite being the fifth consecutive monthly decline in manufacturing activity, July’s decline was the softest so far this year. Warren Hogan, chief economic advisor at Judo Bank, believes that this data suggests the worst of the slowdown is over.
“The jump in the July PMI, while still below the neutral 50 level, confirms that a soft landing is indeed playing out,” Hogan said.
Main Activity Indicators Show Improvement
All of the main activity indicators rose in July. Output and new orders both increased, although they remained just below 50, indicating contractionary territory. Employment in the manufacturing sector has remained firm throughout the slowdown.
Export orders also saw a slight rise in July, although they have been below 50 since December 2022, as shown by the PMI data.
Unclear Trajectory for Manufacturing
While the improvement in activity indicators in July reduces the risk of the sector heading into a recession, Hogan emphasized that there are still no clear signs of a cyclical upswing for manufacturing.
“The trajectory of Australian manufacturing activity is not clear. The improvement in activity indicators in July reduces the risk that the sector is headed for recession. Yet there are few signs of a cyclical upswing for manufacturing,” Hogan added.