Australian Manufacturing Shrinks at Slowest Pace in Seven Months in May

Australia’s AiG Performance of Manufacturing Index rose to 37.5 in May, the highest in seven months, rebounding from a record low at 30.1 registered in the preceding month. The reading remains below the 50 “boom-bust” level, suggesting that manufacturing continued to shrink but at a slower pace. Looking at the details of the report, the Production and New Orders components of the metric saw the most improvement while Inventories and Input Prices fell. This is broadly encouraging news for the sector that employs over 21% of Australia’s labor force: rising orders and depleting inventories suggest firms are seeing a pick-up in demand; lower production costs will allow them greater room to hire additional workers needed to boost output to meet this new-found interest, helping to support improvements in employment and consumption in the months ahead.