The latest survey from Judo Bank, released on Thursday, highlights that Australia's manufacturing sector continued its contraction in October, albeit at a marginally accelerated rate. The manufacturing Purchasing Managers' Index (PMI) dipped slightly to 46.6, down from 46.7 in September. This decline further distances itself from the neutral threshold of 50, which demarcates expansion from contraction in the industry.
The primary factors driving this downturn include restrained market conditions and a persistent weak demand for manufactured goods, which resulted in a sharp contraction of new orders as the fourth quarter began. Consequently, there was a significant drop in production, marking the steepest decline in over four years.
Conversely, the survey revealed an uptick in the services PMI, which rose to 50.6 in October, up from 50.5 in the previous month. This increase was propelled by a brisker pace of incoming new business, enhancing services sector activity. Growth in new business was primarily supported by stronger domestic demand, although exports saw a more significant contraction during October.
Additionally, the composite index showed modest improvement, rising to 49.8 in October from 49.6 in September. This near-stabilization in private sector output conceals the disparities within sectors, revealing that a quicker contraction in manufacturing output was offset by a faster rise in services activity.
