The Judo Bank Australia Manufacturing PMI rose to 49.4 in November, up from 47.3 in October. While the sector remained in contraction for the 10th straight month, the pace of decline softened to its slowest in six months. This slight improvement offers a glimmer of hope for the manufacturing industry, which has been grappling with a prolonged downturn.

Key Challenges: Declining Orders and Output

Despite the softer contraction, new orders remained a weak spot, continuing their downward trend. This decline heavily impacted business activity, as manufacturers struggled to maintain steady workflows. Manufacturing output, in particular, extended its two-year streak of monthly declines, highlighting the ongoing challenges in the sector.

Amid these difficulties, export orders showed a slight increase, offering some relief to struggling manufacturers. This uptick, though modest, could signal opportunities for growth in international markets, even as domestic demand continues to wane.

Input Costs Ease, Offering Relief

Input price pressures eased significantly, with manufacturing cost inflation hitting its lowest level since June 2023. Firms reported reduced costs for key materials such as grains and aluminum, providing much-needed relief in managing expenses.

Output price inflation also slowed, reflecting a reduced pass-through of costs to customers. This suggests a more stable pricing environment, which could help improve competitiveness for manufacturers moving forward.

Backlogs and Job Creation Slow

Manufacturers reported a faster decline in backlogs of work, indicating reduced strain on business capacity. While this may help firms streamline operations, it also reflects lower demand levels, which could weigh on future growth.

The slower contraction in activity was accompanied by a decline in the pace of job creation. While not a major concern yet, this trend underscores the sector’s cautious outlook amid persistent challenges. For manufacturers, balancing costs and productivity will remain crucial in navigating the road to recovery.