Australian Manufacturing Sector Falls Back Into Contraction

By James Glynn

SYDNEY--Australian manufacturing activity fell back into contraction in September, reflecting strengthening headwinds for the economy such as rising fuel costs and an increase in interest rates to their highest level in 15 years.

The headline seasonally adjusted S&P Global Australia manufacturing purchasing managers index fell below the 50.0 no-change mark to highlight the challenges facing the sector.

At 49.6 in September, down from 52.0 in August, the latest reading was the sharpest decline in 21 months.

Weaker new orders for goods led the fall, indicating that demand has yet to stabilize, said Jingyi Pan, economics associate director at S&P Global Market Intelligence.

Manufacturing headcounts also fell for the first time in five months, she added.

"Goods producers in Australia continued to face elevated cost burdens, which alongside an aggravated deterioration in supply conditions meant companies continued to operate in relatively challenging conditions," she added.

The soft data comes as the Reserve Bank of Australia raised interest rates further during the week, with some prospect that it will deliver another hike in November, according to economists.

A fall in new work inflows led goods producers to scale back production at a sharper pace in September, with the rate of contraction reaching its strongest level since December 2024, the data showed.

Write to James Glynn at james.glynn@wsj.com

(END) Dow Jones Newswires

September 30, 2026 19:49 ET (23:49 GMT)