A very ugly result, coming in at 47.8

• down further from November’s abysmal 49.4
• and below the current estimate of 48.2

The flash readout for this can be found here:

• Australian preliminary manufacturing PMI fell to 48.2 in December (previously 49.4)

in summary:

• Aggravation:

  • Manufacturing conditions declined at a faster pace in December, marking the 11th consecutive monthly contraction (PMI at 47.8).
  • A faster decline in total and export orders contributed to a deeper contraction in manufacturing output.

• Economic Drivers:

  • Higher interest rates and reduced demand from the main export markets (USA, Europe, Asia, New Zealand) led to a drop in new orders.
  • Capacity pressures have eased, leading to job cuts and a reduction in extraordinary business.

• Inventory and Procurement:

  • Firms have reduced purchasing activity and inventory holdings, reflecting a reluctance to hold inventories amid falling demand.
  • Finished goods inventories fell for the 11th time in 2024.

• Price and price dynamics:

  • Input costs increased due to higher material, energy and shipping costs, along with supply constraints that caused longer supplier lead times.
  • Selling prices rose as companies passed on the burden of costs, with producer price inflation at its highest since October but below the long-term average.

• Business Trust:

  • Despite the decline, business confidence reached its highest level since August 2022, boosted by optimism for lower interest rates and local elections in 2025.

• Outlook:

  • Firms remain hopeful of an improved manufacturing outlook in the coming year despite heightened cost pressures and ongoing challenges.

more to come

This article was written by Eamonn Sheridan at www.forexlive.com.



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