The Australian Ai Group Manufacturing Index dropped 13.4 points to -20.1 in October 2026, unwinding the gains recorded in September. The sector continued to struggle with soft demand, rising input costs, labour shortages, shipping delays and intensified overseas competition. Downstream manufacturers were hit hardest as consumer demand weakened further.
Cost pressures increased, with higher fuel prices feeding through supply chains. However, subdued market conditions constrained manufacturers’ ability to raise prices, putting additional pressure on profit margins.
By sector, the machinery and equipment index slumped 25 points to -43.2, its lowest reading on record. The food and beverage sub-index fell 28 points to -13.6 but has remained relatively steady at about -10 over the past year on a trend basis.
In contrast, upstream segments showed some resilience. The chemicals index rose 10.3 points to -2.9, its strongest level in two years, supported by stronger domestic and international orders. The metals index gained 4.8 points to -22.2, reflecting improved demand and higher pre-Christmas ordering.
