Six straight months of expansion for the manufacturing industry

20th January 2016

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The festive season was a positive one for many business leaders in the manufacturing industry, with reports from the Australian Industry Group/ Australian Performance of Manufacturing Index showing that the sector finished the year in expansion.

For the sixth straight month, the industry finished above the 50 point mark, a sign that the sector is in expansion rather than contraction. This despite a small decline of 0.6 points to 51.9 points in the final month of the year.

Manufacturing continues to move in the right direction.Manufacturing continues to move in the right direction.

Sub-sectors showing great promise

While the overall state of the manufacturing industry is important to consider, the sub-sector results highlight valuable information on the specifics of this vital cog in the Australian economy.

In December, the majority of these sub-sectors finished above 50 points. This included wood and paper products (64.3 points), petroleum, coal, chemical and rubber products (55.2 points), non-metallic mineral products (54.2 points), food and beverages (51.8 points) and printing and recorded media (50.9 points).

Ai Group Chief Executive, Innes Willox explained that the manufacturing industry capitalised on a strong end to 2015 and will look to take this momentum into the new year.

"After the extended weakness the sector has experienced over the past five years, this is a most welcome turnaround. With export growth solid and production, sales and new orders all on the rise, there is now a very good base from which manufacturers can launch a prosperous 2016," he said in a January 4 media statement.

Optimism high among manufacturing businesses

With the Australian economy heading in the right direction, a number of free trade agreements on the table and political stability in the air, 2016 is shaping up to be a positive one for businesses across the board - including those in manufacturing. This sentiment has already rubbed off on many, given the results of Dun & Bradstreet's December Business Expectations Survey.

The manufacturing industry scored the highest Net Optimism score with 42.4 points, ahead of all other sectors.

According to the credit firm, the manufacturing industry scored the highest Net Optimism score with 42.4 points, ahead of all other sectors. Close to half (45.8 per cent) of those in the sector expect a positive impact from the political stability, in particular.

Stephen Koukoulas, Economic Advisor to Dun & Bradstreet, said there is still room for improvement.

"The economy is not doing poorly, but nor has it had the breadth of expansion that is required for the business sector to have confidence and a sustained lift in sales, profits and employment," he noted.

If your manufacturing business wants to start 2016 on the right note, this is where the team at Advanced Business Manager can be of assistance. With smart business management software available, this can revolutionise your processes for a strong year to come. For more information, contact us today.