Australia’s Manufacturing PMI Rebounds to 51.6, Nudging AUD Higher as Supply Delays Deepen
Australia’s factory activity snapped back into expansion in November, with S&P Global’s Manufacturing PMI climbing to 51.6 from 49.7—its strongest reading since August—lifting risk appetite around the Aussie even as delivery times lengthened and price pressures eased.
At a glance
- S&P Global Manufacturing PMI rose to 51.6 in November from 49.7 in October, back in expansion and the best since August.
- New orders and output expanded, signaling a firmer demand pulse into year-end.
- Forward-looking gauges point to sustained growth; hiring accelerated among the fastest paces this year.
- Supplier delivery times deteriorated to the worst since last December amid supply constraints, shipment delays and port congestion.
- Input and output price inflation eased, tempering near-term cost pressures.
- AUD/USD hovered around 0.6540 after the release, with FX volatility subdued.
PMI returns to growth on demand and hiring
S&P Global reported that Australia’s goods-producing sector expanded at the quickest pace in three months, driven by fresh gains in new business and output. Survey components tied to future output and new orders suggested the improvement could persist near term, while employment rose at one of the fastest clips of 2024, underlining improving capacity and confidence.
Supply strains resurface but inflation cools
Manufacturers faced the sharpest lengthening of delivery times since December last year, reflecting supply constraints, shipping delays and port congestion. Despite the bottlenecks, the survey indicated a moderation in input and output price inflation in November—helpful for margins and supportive of the broader disinflation trend RBA policymakers want to see.
AUD and market reaction
The Australian dollar steadied near 0.6540 against the U.S. dollar following the data, as traders weighed firmer domestic activity against persistent global supply frictions. With liquidity typical of the Asia session and no immediate rates catalyst, price action was contained. For FX, the blend of improving growth signals and easing inflation leaves the policy outlook balanced: supportive for sentiment, but unlikely to materially shift near-term RBA expectations without corroborating data from inflation and labor-market prints.
What traders are watching next
– Whether the forward-looking PMI indices translate into stronger hard data on production and exports.
– Persistence of supply-side delays that could re-tighten price pressures if they linger into 2025.
– Upcoming Australian inflation and labor data for clues on the RBA’s policy path.
– Global risk sentiment and commodity dynamics that often sway AUD, alongside USD direction.
FAQ
What did Australia’s Manufacturing PMI show for November?
The PMI rose to 51.6 from 49.7, indicating a return to expansion and the strongest reading since August. It was supported by increases in new orders and output, with employment also improving.
How did the Australian dollar react?
AUD/USD traded around 0.6540 after the release. The move was modest as investors balanced stronger domestic momentum with ongoing supply-chain strains and a calm rates backdrop.
Does this change the outlook for the Reserve Bank of Australia?
Not materially on its own. The PMI’s expansion with easing inflation is a constructive mix, but the RBA remains data-dependent. Upcoming inflation and labor figures will be more decisive for policy expectations.
What risks could derail the manufacturing rebound?
Escalating supply constraints—such as shipment delays and port congestion—could pressure delivery schedules and costs. A sharp downturn in global demand would also challenge new orders and production.
Which levels matter for AUD/USD now?
Traders are watching the mid-0.65 area as near-term support and resistance pivots. A sustained break higher would likely require stronger domestic data or a softer U.S. dollar tone.
Why do delivery times matter for inflation?
Longer delivery times often signal supply bottlenecks that can push up costs. However, November’s survey showed easing price pressures despite worsening delivery times, which is encouraging for inflation trends.
Reporting by BPayNews.
