AUSTRALIAN INDUSTRY INDEX

EoY boost curtails industrial contraction

Key findings

The Australian Industry Index® improved in November but continued to point towards contractionary conditions.
The activity, employment and new orders indicators all strengthened but remain in moderate contraction.
This was driven by a very strong end-of-year improvement reported by construction and business services.
The PMI manufacturing was steady but remains in contraction, with machinery and chemicals improving slightly.
The wages indicator continued to ease on the back of lower wages growth, but input price growth remains
In trend terms, the Aii has been strengthening since August, suggesting a modest improvement in industrial business conditions this financial year.

The contractionary conditions in the Ai Group Australian Industry Index® eased in November 2024, lifting 17.9 points to -10.8 points (seasonally adjusted).

November 2024

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Industry activity

The deep decline in the activity/sales indicator eased by 17.9 points in November but continued to indicate contraction at -15.1.
The employment indicator rose to be broadly stable (-2.0) the strongest result since April 2024
On a trend basis, employment levels have been in mild contraction across 2024.
Some respondents reported difficulties converting enquiries to sales, while others had a seasonal boost as end of year activity was brought forward. Skills and labour shortages continued to hamper productivity.

Leading indicators

The contraction in new orders eased significantly November (-12.8) up 26.0 points from October (-38.8).
On a trend basis, the new orders indicator has been growing since mid-2024, but remains in contraction
The input volumes indicator fell by a further 2.6 points to
-11.3 seasonally adjusted.
Some businesses reported increased local and international uncertainty, increased import competition and supply disruptions in November.
Others described orders expected in 2025 brought forward, a seasonal boost and pockets of strong demand.

Prices and wages

Input prices increased slightly to 38.6 but were well below the recent peak in July 2024 (63.8). In trend terms they have been easing since mid-2024.
The fall in sales prices softened modestly by 1.5 points to -3.7, in trend terms slipped into negative territory.
The gap between the input and sales price indicators widened to 42.3 in November from 39.5 in October.
The growth in average wages eased by 18.2 points to 14.3. This continues an easing pattern following the wages increase for award employees in July 2024.

Australian PMI® and PCI®

The Australian PMI® (all manufacturing) improved slightly (1.8 points) to land at -17.9. In trend terms, the indicator has hovered around -25.0 for the second half of 2024.
The Australian PCI® (construction) eased by 21.9 points, but remained in contraction (-19.0). In trend terms the indicator has been improving since mid-2024.
Manufacturers noted a lift in overseas competition and a reduction in new orders for some domestic and export markets. The softening of the AUD has increased prices for some import reliant businesses.
Builders experienced project delays extending into 2025 due to slow permit processing times and tight margins. Some reported deferred investment leading to a decrease in projects to tender.

Upstream manufacturing

Upstream manufacturing indicators moved in different directions but remained in negative territory.
Chemicals eased lifting 4.0 points to -19.4, however, the contraction in the minerals and metals declined further by 4.9 points to -19.1.
Chemical manufacturers reported customers upgrading capital expenditure and increased export orders, while some mentioned supply chain disruption of raw materials.
Some minerals and metals manufacturers reported staff availability and absenteeism hindering business activity. Others mentioned new orders coming due to upcoming season, and cheap overseas import of products.

Downstream manufacturing

The machinery and equipment index improved by 4.6 points in November, but was still in decline at -17.0.
Labour shortages remained acute for machinery manufacturers, while higher logistics cost continued to put pressure on margins.
The food, beverages & TCF sector remained in a similar rate of contraction in November (-11.7) as October.
Food & beverages manufacturers reported increased export orders and new additional domestic orders due to upcoming Christmas period. Some noted a drop in retail sales due to economic uncertainty.

Business-oriented services

The business-oriented services sector improved by 20.9 points, easing substantially to mild contraction (-3.5) in November.
The business services index has been volatile over the past three years and has been a downward trend from early
This indicator includes utilities, technical services, and supply chain/transport providers.
Some businesses reported higher input costs, staff shortages and a decline in new orders due to disruptive weather conditions. However, others described steady orders and improved activity from seasonal demand.

Capacity utilisation

Capacity utilisation in Australian industry moved upwards to 81.0% in November.
Utilisation has been trending up slightly since 2024.
Utilisation scores have become more volatile in 2024 than in the past. This likely reflects fluctuating new orders, exaggerating ‘stop-start’ patterns in industry.
Some survey respondents indicate that increased new orders lifted capacity utilisation despite having supply side constraints.

About the Australian Industry Index

The Australian Industry Index is a monthly index that measures changes in activity in Australia’s industrial sectors. It provides diffusion indices which measure rates of changes in the level of industrial activity – expansion, stability or contraction. A positive reading indicates the activity is expanding; negative indicates contraction. The distance from 0 indicates the strength of the expansion or decline.

The Australian Industry Index is based on monthly surveys from a national sample of Australian businesses. It uses ANZSIC industry codes for classifying sectors, and weights survey results using ABS data on gross value added by sector. Seasonal adjustment and trend calculations follow ABS methodology. Read more on our detailed methodology.

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