Australia final manufacturing PMI, December 2024: 47.8 (prior 49.4)

A very ugly result, comes in at 47.8

• slumping further from November’s awful 49.4
• and below the flash estimate of 48.2

The flash reading for this can be found here:

• Australia preliminary manufacturing PMI December slumps to 48.2 (prior 49.4 )

In summary:

• Deterioration in Conditions:

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

• Economic Drivers:

  • Elevated interest rates and reduced demand from major export markets (US, Europe, Asia, New Zealand) led to declining new orders.
  • Capacity pressures eased, leading to job shedding and a reduction in outstanding business.

• Inventory and Purchasing:

  • Firms reduced purchasing activity and inventory holdings, reflecting reluctance to hold stock amidst falling demand.
  • Stocks of finished goods fell for the 11th time in 2024.

• Cost and Price Dynamics:

  • Input costs rose due to higher material, energy, and shipping costs, coupled with supply constraints causing longer vendor lead times.
  • Selling prices increased as firms passed on cost burdens, with output price inflation at its highest since October but below the long-run average.

• Business Confidence:

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

• Outlook:

  • Firms remain hopeful for improved production prospects in the coming year despite intensified cost pressures and ongoing challenges.

I guess business confidence climbing to a 28-month high is a positive in the report. Not much else is.

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