Australia's Manufacturing Expansion Tentative in July
By James Glynn
SYDNEY--There were tentative signs of recovery in the Australian manufacturing sector at the start of the third quarter as output and new orders returned to growth and job creation gathered pace.
The headline seasonally adjusted S&P Global Australia manufacturing purchasing managers index stood at 52.0 in July, up from 51.5 in June, signalling expansion.
"Renewed rises in output and new orders during July provide some reassurance that the Australian manufacturing sector is recuperating from the downturn caused by the outbreak of war in the Middle East," said Andrew Harker, economics director at S&P Global Market Intelligence.
Still, risks around the outlook for the Iran conflict remain, he added.
"Some deterioration in the situation in the Middle East means that the forward path is highly uncertain, with the possibility that the nascent recovery in the manufacturing sector may prove fleeting," Harker added.
Firms continued to face sharply rising input costs and supply chain disruption as a result of the conflict, the data showed.
Still, production growth was recorded for the first time in six months, linked to a first increase in new orders since February.
Inflationary pressures limiting growth in the sector continued to be closely linked to the war in the Middle East, with firms reporting higher costs for fuel and shipping in particular.
Although the rate of input price inflation eased markedly in July and was the lowest since February, costs continued to rise sharply with 40% of respondents signalling an increase in July.
Manufacturers also continued to expand their staffing levels in July, the third month running in which this has been the case. The rate of job creation was solid and the fastest since January, the data showed.
With new orders returning to growth in July, manufacturers were more confident in the 12-month outlook for production, according to the report.
-Write to James Glynn at james.glynn@wsj.com
(END) Dow Jones Newswires
August 02, 2026 19:48 ET (23:48 GMT)
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