Australian manufacturing shows strongest growth since 2022

Australian manufacturing conditions improved at their fastest pace since late 2022 in March, according to S&P Global data released on Tuesday.

The headline S&P Global Australia Manufacturing Purchasing Managers' Index (PMI) posted 52.1 in March, up from 50.4 in February, marking the third consecutive month above the 50.0 neutral threshold.

New orders grew at their fastest rate in 28 months, driving the strongest expansion in output since October 2022. Manufacturers attributed the rise in new business to better domestic economic conditions, marketing promotions and client restocking.

The sector also returned to solid employment growth, with job creation accelerating to its strongest pace in two years. Firms reported backfilling positions left empty during earlier periods of job shedding.

“March's manufacturing PMI data brought positive news with indications of the strongest improvement in manufacturing sector conditions in nearly two-and-a-half years,” said Jingyi Pan, Economics Associate Director at S&P Global Market Intelligence.

After nearly two-and-a-half years of contraction, purchasing activity among manufacturers returned to expansion, contributing to increased stocks of purchases for the first time in over a year.

Despite these positive developments, the survey revealed some challenges. Export orders fell, reflecting subdued external conditions, while vendor delivery times lengthened as disruptions from Cyclone Alfred added to existing supply constraints.

On the price front, input costs continued to rise at a steep rate amid higher raw material, transport and finance costs, though output charge inflation eased as manufacturers partially absorbed cost increases to support sales in a competitive environment.

Business confidence, while remaining positive, fell from February's level as some firms expressed concern about the potential impact of US tariffs.

Picture: credit Australian Department of Defence