Australia manufacturing sentiment improves in Dec 2025

Australia’s manufacturing sector has extended its expansion into the final month of 2025, supported by improving domestic demand, higher production and renewed hiring activity, according to the latest PMI data from S&P Global.

The seasonally adjusted S&P Global Australia Manufacturing Purchasing Manager’s Index stood at 51.6 in December, unchanged from November and remaining above the neutral 50 threshold.

Manufacturing output rose for a second month, underpinned by continued growth in new orders. However, the pace of expansion eased as softer market conditions, heightened competition and weaker overseas demand constrained momentum. New export orders declined marginally for the fourth straight month, reflecting budget pressures among international clients.

Despite the slowdown, rising order books encouraged firms to step up purchasing activity and expand payrolls. Employment increased at the fastest rate in nine months, aided by improved labour availability, which also helped reduce outstanding workloads further in December.

Supply-side pressures intensified during the month, with delivery times lengthening at the sharpest pace since November 2024 due to material shortages and shipment delays. As a result, input costs rose at a faster rate, S&P Global said in a release.

Manufacturers passed on part of the cost burden to customers, leading to a further rise in output prices, although inflation remained below long-term survey averages.

Business confidence strengthened towards year-end, with sentiment reaching a four-month high. Firms expressed optimism that new product launches and expansion plans would support sales and production growth over the next 12 months.

“December’s Australian Manufacturing PMI data indicated that business conditions in the goods producing sector continued to improve at the end of 2025. This was again driven by better domestic demand as external sales remained subdued in December. Although the rates of new order and output growth both slowed at the end of the fourth quarter, it was positive to see a higher level of business confidence and upticks in both hiring and purchasing activity, which reflected positive expectations for higher output in the coming year,” said Jingyi Pan, economics associate director at S&P Global Market Intelligence.

ALCHEMPro News Desk (HU)