Judo Bank / S&P Global November Manufacturing PMI comes in at 47.7, in line with the preliminary (flash) result.
Last week we had the flash reading:
Key points made in the report:
- Sharpest fall in new orders since May 2020
- Marginal decline in staffing levels
- Slower rates in inflation signalled
On that point about inflation, this from Warren Hogan, Chief Economic Advisor at Judo Bank in the report:
- “The good news is that the inflation indicators are continuing to improve with both the input and output price indexes down in November.
- “Input prices, essentially an indicator of cost pressures, are showing a gradual easing in recent months after jumping up through the middle of the year. Input prices remain elevated and well above the average levels seen prior to the pandemic.
- “Output prices have all but normalised for Australian manufacturers which while good news for the broader inflation picture, is bad news for manufacturers margins and profits as cost pressure remain elevated.
- “There is strong evidence in the November survey that manufacturers capacity to pass on cost pressures has been compromised by the broader economic slowdown. This is pressuring profitability and business activity and will work to reinforce the slowdown in economic activity already underway.
- “For the RBA these results should be welcome news. The Judo Bank Manufacturing PMI confirms that the economy is responding to higher interest rates with weaker activity and easing inflation pressures.
- “While the steep decline in new orders since September is concerning, the overall picture painted by the latest Australian manufacturing PMI is of a soft landing for the economy with a meaningful easing in inflation pressures.”
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Speaking of the RBA, the Reserve Bank Board meets next Tuesday, December 5. The Bank raised the cash rate again in November after a months-long pause. The Bank is widely expected to be on hold next week.
