Contractionary conditions ease for industry

The contractionary conditions in the Ai Group Australian Industry Index® eased in September 2023, gaining 8.2 points to -3.5 points (seasonally adjusted). The index, which reports industry conditions and sentiment, has indicated contraction for the last 17 months.

Key findings for September 2023:

• The Ai Group Australian Industry Index® indicated contracting conditions in September, for the 17th month since the start of the current interest rate cycle.
• The employment, industrial activity and new orders indicators all improved significantly, the fourth month of a recovery trend following lows seen in April and May.
• Price indicators remained strongly positive, but input prices and wages have continued to ease from peaks in July. The sales price indicator recovered after a large fall in August.
• Sub-industries reported mixed conditions. The construction indicator strongly returned positive, business services and downstream manufacturing began recovery, but upstream manufacturing remains fragile.

Innes Willox, Chief Executive of the national employer association Ai Group said: "Welcome relief for industry has been reported in September, with the Australian Industry Index showing improvements in activity, employment and new orders. While the Aii has been growing since a low point in May, it remains in negative territory, with new orders still relatively weak and holding back the pace of the recovery which appears underway. A strong rebound in the Australian PCI® construction indicator is welcome news for the housing sector, but weakness in upstream chemicals and metals manufacturing remains a concern," Mr Willox said.

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The Ai Group Australian Industry Index® is a monthly index of business activity in the Australian industrial ecosystem. It includes the manufacturing, construction, engineering, technology and business services sectors, which together account for approximately 36% of the Australian economy. It reports on a -100 to 100 scale. Values below 0 indicate contraction, and above 0 indicate expansion. The distance from 0 indicates the strength: 20 is expanding faster than 10.

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About the Ai Group Australian Industry Index®
The Ai Group 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. For the detailed methodology, please visit https://www.aigroup.com.au/resourcecentre/research-economics/australian-industry-index/FAQs/

When referring to the Ai Group Australian Industry Index® the source should be attributed as “Australian Industry Group”.