Food and beverage manufacturing is on the rise

Australia's manufacturing industry expanded in April, led by the food and beverages sector, according to the Australian Industry Group Australian Performance of Manufacturing Index (PMI).

The Australian PMI measures monthly changes in the manufacturing industry, with readings above 50 points indicating expansion in activity. It rose by 3.8 points to 54.8 in April, marking 32 consecutive months that it has been stable or positive (50 points or higher).

The index for the food and beverages category was "very strong",  increasing by 1.6 points to 61.8, which was the highest it has been since March 2016.

Ai Group Chief Executive Innes Willox said: "Australia's manufacturing industry expanded in April with production, sales, exports and new orders all gaining ground. Advances were most marked in the food and beverages sector, which is the largest component of domestic manufacturing."

According to the PMI, manufacturers reported higher demand than usual, with the lower Australian dollar supporting export orders. It also found input prices rose “mainly due to higher prices and lower availability and/or quality of raw agricultural inputs", which was partly caused by drought.

As well as high input costs, the upcoming federal election and high energy prices were also cited as key concerns for all manufacturers.

“Employment growth eased in April while pressure on producer margins continued with selling prices unable to keep up with wage and input price movements. Elevated energy prices remain the largest concern for many manufacturers with stable and effective policy in this area a key area of interest," Willox said.

Despite the employment index falling from 5.1 points to 51.5, it was strongest in the food and beverages sector. The Australian PMI report said the food, beverages and tobacco sector employed 247,700 people in February 2019, accounting for 27% of manufacturing employment.

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Image credit: ©stock.adobe.com/au/Dmitry Vereshchagin