Australian Manufacturing Activity Edges Up From Recessionary Lows

By James Glynn

SYDNEY--Australian manufacturing activity improved in October, but overall remained near recessionary lows.

The headline seasonally adjusted Judo Bank Australia manufacturing purchasing manager's index stood at 47.3 in October, up from 46.7 in September, a ninth successive monthly deterioration.

"The final manufacturing PMI data for October shows an improvement in trading conditions towards the end of the month. However, trading conditions in the sector remain historically weak, with businesses continuing to gradually reduce headcount over the month," said Matthew De Pasquale, economist at Judo Bank.

Output and new orders indexes improved over the month, with final activity readings showing an improvement on the flash reading for October and the final readings for September.

The improvement follows a significant fall in output readings over the past four months, suggesting that the worsening of conditions in the sector is no longer accelerating," De Pasquale said.

Household stimulus in the form of income-tax cuts doesn't appear to have translated to improved trading conditions for local manufacturers, contrasting with the continuing resilience seen across the services economy.

Australian manufacturers have been reducing headcount in aggregate over almost every month of 2024, with the employment index only above the neutral level in May this year, the data showed.

Labor shedding in the manufacturing sector is in contrast to elevated labor demand and ongoing labor shortages in the services sector, particularly healthcare and education.

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