Average Wages Diffusion Index (Po

Increasing Employment

65 65 60 60 55 55 50 50 45 45 40 40 35 35 30 30 25 25 20 20

70 65 60 55 50 45 40 35 30 25 20

70

Average Wages

65 60 55 50

Employment

45 40 35 30 25 20

June 08

Dec 08

June 09

Dec 09

June 10

Dec 10

June 11

Mar 08

Sept 08

Mar 09

Sept 09

Mar 10

Sept 10

Mar 11

60 65

65 60
Increasing

60 55 55 50 50 45 45 40 40 35 35

Decreasing

Diffusion Index (Points)

55 50 45 40 35

Finished Stocks

Sept 11

Dec 11

Decreasing

Employment Diffusion Index (Poi

DECEMBER 2011
AUSTRALIAN PMI
DEC

30

Sep 09

Dec 09

Jun 10

Sep 10

Dec 10

Jun 11

Sep 11

Mar 10

Mar 11

Dec 11

MANUFACTURING REMAINS FLAT IN DECEMBER

30
Mar 08 June 08 Dec 08 Mar 09 June 09 Dec 09 Mar 10 Sept 08 Sept 09

June 10

Dec 10

Mar 11

June 11

Sept 10

Sept 11

Dec 11

65 60

KEY FINDINGS

50.2

55 50 45 40 35

Manufacturing activity remained broadly unchanged in

90 80 Diffusion Index (Points) 70 60 50 40 30 20

Mar 08

Sep 08

Dec 08

Mar 09

Sep 09

Dec 09

Mar 10

Sep 10

Dec 10

Mar 11

Sep 11

Dec 11

Jun 08

Jun 09

Jun 10

Jun 11

Diffusion Index (Points)

December. The seasonally adjusted Australian Industry Group-PwC Australian PMI rose 2.4 points to 50.2. (Readings above 50 indicate an expansion in activity with the distance 3 month moving average from 50 indicative of the strength of the increase.) The increase in manufacturing activity in the miscellaneous manufactures; basic metals; paper, printing and publishing; and transport equipment sub-sectors was largely balanced by the significant decline in activity in the fabricated metals; chemicals, petroleum and coal products; construction materials; and textiles sub-sectors. Most survey respondents remained cautious about the outlook for manufacturing, citing the negative influences of softer domestic demand, heightened global economic uncertainty and cheaper import substitutes. Wages and input costs continued to rise in December, while the decline in selling prices persisted, pointing to a narrowing of manufacturing profit margins. Queensland was the only State to record an expansion in manufacturing activity.
Deliveries Input

Increasing

60 55 50

Increasing

NOV

30

Decreasing

Diffusion Index (Points) Mar 08

45 40
Sept 08 Dec 08 Sept 09 Dec 09 Sept 10 Dec 10 Sept 11 June 08 Mar 09 June 09 Mar 10 June 10 Mar 11 June 11 Dec 11

NOV
Decreasing

65 60

30 25 20

USA ISM PMI

35

52.7

55 50 45 40 35

Deliveries

Input Prices

Average Selling Prices

Increasing

60 55 50 45 40

OCT

Australian PMI

3 month moving average

30

Decreasing

Australian35 PMI

NOV exchange rate impact

65 60 55 50 45 40 35 30

Decreasing

Increasing

EUROZONE PMI

SECTORS
Seasonally adjusted, seven out of the 12 manufacturing

30
Food and beverages

25 20

70

Production Diffusion Index (Points)

Capacity Utilisation %

Capacity Utilisation %

sub-sectors recorded declines in activity in December, down from eight sub-sectors in November. The decline in activity in the fabricated metals; chemicals, 80 petroleum and coal products; construction materials; and textiles sub-sectors is partly attributable to softer domestic demand, 70 65 weaker consumer confidence, cheaper import substitutes and 65 60 uncertainty about the global economic outlook. 60 75 55 The miscellaneous manufactures; basic metals; paper, printing 55 and publishing; and transport equipment sub-sectors recorded 50 50 the strongest expansions during December. 45
45

Textiles
Jun 08 Jun 09 Jun 10 Mar 08 Sep 08 Dec 08 Mar 09 Sep 09 Dec 09 Mar 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11

46.4
60 50 40 30

Clothing and footwear Wood products and furniture Paper, printing and publishing Chemicals, petroleum, coal Construction materials
70 65 60 55 50 45 40 35 30 25 20

% of respondents

Australian PMI

3 month moving average

EU

Basic metals Fabricated metals Transport equipment Capacity Utilisation

80

OCT 20
10 0 positive

Machinery and equipment Miscellaneous TOTAL

75

NOV Sigificantly
100

65Moderately 60 55 50 45 40 35
positive

Production

35 35
30 25 25

70

Diffusion Index

November 11

December 11

JAPANESE PMI

40 40

10

20

30

40

50

60

70

80 7090

May 10

No

49.1

65

Mar 08

June 08

Sept 08

Dec 08

Mar 09

June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

Diffusion Index (Points)

50 25 45 40 35 30 25 20 15

CHINESE PMI

to 51.0, indicating that manufacturing output increased in December. 50 The result for manufacturing output reflected significant 50 increases in production in the food and beverages; clothing and 45 45 70 footwear; wood products and furniture; paper, printing and 60 40 40 60.0 65 publishing; and basic metals sub-sectors. 35 35 55.5 60 On an unadjusted basis, three sub-sectors reported declines 30 51.0 55 in production in December, down from five sub-sectors 25 46.5 50 in November. 25 42.0 45 Overall, capacity utilisation in December rose to 76.3%. 20 20
60 55

65

Seasonally adjusted, the production sub-index rose 1.4 points

60 55

65

70 65

Dec 11

PRODUCTION AND CAPACITY 20 20 UTILISATION 70

65

60

JA

80

Production Diffusion Index (Points)

60 55 50
70 65

Capacity Utilisation Capacity Utilisation % 75

OCT

30

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

Dec 11

45
Increasing

70

Production

40

NOV

65 60

60 35 55 30

65

47.7

55 50 45 40 35

40 35 28.5 30 24.0 25 19.5 20 15.0 15

37.5 33.0

20

Mar 08

June 08

Sept 08

Dec 08

Mar 09

June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

New Orders

Decreasing Dec 11

60

Mar 08

June 08

Sept 08

Dec 08

Mar 09

June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

70 65 55.5 60 51.0 55 46.5 50

60.0

70 65

Dec 11

Supported by:

JULY OCT

CH

30

asing

60

www.markiteconomics.com

ts)

55

Increasing

Average Wages Diffusion Index (Points) Average Wages Diffusion Index (Points) Average Diffusion Index Index Average Wages Wages Diffusion(Points)(Points)

Mar 08 Mar 08 Mar 08 Mar 08 June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11

75 EMPLOYMENT AND AVERAGE WAGES 75 70 70 75 75 7565 The seasonally adjusted employment sub-index increased 0.7 75 65 75 7075 points to 46.0 in December, indicating that manufacturing 70 7060 70 60 70 6570 65 6555 65 55 65 6065 employment has resumed the decline witnessed through the 60 6050 60 50 60 5560 most part of this year. 55 5545 55 45 55 5055 50 5040 Decreases in employment were recorded in the food and 50 40 50 4550 beverages; chemicals, petroleum and coal; basic metals; and 45 4545 45 35 4045 40 4035 40 fabricated metals sub-sectors. 40 40 30 30 35 35 3525 Wages growth in the manufacturing sector continued, with the 35 25 35 3035 30 3020 30 20 30 2530 wages sub-index up 4.8 points to 61.1 in December. 25 2525 25 2025 20 2020 20 20
Employment Employment Employment Employment

Mar 08 Mar 08 Mar 08 Mar 08 June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11

70 65 70 7060.0NEW ORDERS 70 60 60.0 65 60.0 In seasonally adjusted terms, the new orders sub-index rose by 1.8 6555.5 60.0 65 55 55.5 60 55.5 6051.0 points to 49.9 in December, pointing to a continued easing in the 55.5 60 50 51.0 55 51.0 5546.5 pace of decline in new orders. 51.0 55 42.0 45 46.5 50 Unadjusted, new orders dropped in five of the 12 sub-sectors. 46.5 5046.5 50 37.5 40 42.0 45 The textiles and construction materials sub-sectors recorded 42.0 4542.0 45 33.0 35 37.5 40 37.5 4037.5 significant decreases in new orders. 40 30 33.0 35 33.0 3528.5 On the other hand, new orders increased in miscellaneous 33.0 35 25 28.5 30 28.5 3024.0 28.5 30 20 24.0 25 24.0 2519.5 manufactures; clothing and footwear; basic metals; and food and 24.0 25 15 19.5 20 19.5 2015.0 beverages sub-sectors. 19.5 20 15.0 15 15.0 1515.0 15
New Orders New Orders New New Orders Orders

70 65 70 70 70 60 65 65 65 55 60 60 60 50 55 55 55 45 50 50 50 40 45 45 45 35 40 40 40 30 35 35 35 25 30 30 30 20 25 25 25 15 20 20 20 15 15 15

Increasing Increasing Increasing

Diffusion Index (Points) Diffusion Index (Points) Diffusion Index Diffusion Index (Points)(Points)

Increasing

WHAT IS THE AUSTRALIAN PMI?

The Australian Industry Group - PwC Australian Performance of Manufacturing Index (Australian PMI) is a seasonally adjusted national composite index based on the diffusion indices for production, new orders, deliveries, inventories and employment with varying weights. An Australian PMI reading above 50 points indicates that manufacturing is generally expanding; below 50, that it is declining. The distance from 50 is indicative of the strength of the expansion or decline. Survey results are based on a rotating sample of manufacturing companies eachmonth. More information can be obtained from the Ai Group website www.aigroup.com.au.

70 75 75 65 75 70 70 60 70 65 65 55 65 60 60 50 60 55 55 45 55 50 50 40 50 45 45 35 45 40 40 30 40 35 35 25 35 30 30 20 30 25 25 25 20 20 20

Average Wages Average Wages Average Wages Average Wages Employment Employment Employment Employment

70 75 75 65 75 70 70 60 70 65 65 55 65 60 60 50 60 55 55 45 55 50 50 40 50 45 45 35 45 40 40 30 40 35 35 25 35 30 30 20 30 25 25 25 20 20 20

Employment Diffusion Index (Points) Employment Diffusion Index (Points) Employment Diffusion Index Employment Diffusion Index (Points)(Points)

75

Decreasing Decreasing Decreasing

75

Decreasing

SPONSOR STATEMENT
PwC is delighted to be associated with the Survey of Australian Manufacturing and the Australian Industry Group. This association brings together the significant experience and expertise of Australias leading industry body and the largest business adviser to the manufacturing sector. We look forward to continuing our association with the Australian Industry Group and its members, and to playing our part in the ongoing development of Australian manufacturing.

30 30 30

DELIVERIES, INPUT COSTS AND SELLING PRICES

In seasonally adjusted terms, supplier deliveries increased in
90 90 90 80 90 80 80 70 80 70 70 60 70 60 60 50 60 50 50 40 50 40 40 30 40 30 30 20 30 20 20 20

Mar 08 Mar 08 Mar 08 Mar 08 June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11

60FINISHED STOCKS 65 Manufacturing inventories increased slightly in December, with 60 65 6060 6560 55 65 the seasonally adjusted sub-index rising 3.4 points to 53.9, above 60 6055 55 5555 the 50-point level. 60 50 55 5550 Inventories increased most strongly in the paper, printing 50 55 5050 45 and publishing; textiles; and basic metals sub-sectors, while 50 5045 50 45 4545 the clothing and footwear sub-sector recorded the strongest 40 45 4540 45 decrease in inventories. 40 4040 35 40 4035 40 35 3535 35 30 3535 30 3030
Finished Stocks Finished Stocks Finished Finished Stocks Stocks

65 65 65 60 65 60 60 55 60 55 55 50 55 50 50 45 50 45 45 40 45 40 40 35 40 35 35 30 35
Increasing Increasing Increasing Decreasing Decreasing Decreasing

Diffusion Index (Points) Diffusion Index (Points) Diffusion Index Diffusion Index (Points)(Points)

Decreasing

Increasing

CONTACT
Increasing Increasing Increasing Increasing

Mar 08 Mar 08 Mar 08 Mar 08 June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11 Decreasing Decreasing Decreasing Decreasing

December, with the sub-index rising by 6.9 points to 52.8. Unadjusted, deliveries rose in eight sub-sectors, with the textiles; food and beverages; paper, printing and publishing; clothing and footwear; and miscellaneous manufactures sub-sectors recording significant increases. The increase in input costs persisted in December, with the seasonally adjusted sub-index rising 0.3 points to 61.9. All sub-sectors recorded increases in input costs. Selling prices continued to fall in December, with the selling prices sub-index increasing 1.8 points to 46.4.
Deliveries Input Deliveries Input Deliveries Deliveries Input Input

Diffusion Index (Points) Diffusion Index (Points) Diffusion Index Diffusion Index (Points)(Points)

Heather Ridout Chief Executive Ai Group work 02 9466 5504

Markit Economics www.markiteconomics.com

Deliveries

Input Prices

Average Selling Prices

Deliveries Deliveries Deliveries

Input Prices Input Prices Input Prices

Average Selling Prices Average Selling Prices Average Selling Prices

AUSTRALIAN PMI
December 2011 AUSTRALIAN PMI 50.2 PRODUCTION 51.0 EMPLOYMENT 46.0 NEW ORDERS 49.9 INVENTORIES 53.9 SUPPLIER DELIVERIES 52.8 INPUT PRICES 61.9 EXPORTS 47.4 SELLING PRICES 46.4 AVERAGE WAGES 61.1 CAPACITY UTILISATION (%) 76.3

The Australian Industry Group, 2011 This publication is copyright. Apart from any fair dealing for the purposes of private study or research permitted under applicable copyright legislation, no part may be reproduced by any process or means without the prior written permission of The Australian Industry Group.

Disclaimer The Australian Industry exchange rate impact Group provides information services to its members and others, which exchange rate impact exchange industryimpact include economic andrate impact exchange rate policy and forecasting services. 70 None of the information provided 7070 here is represented or implied to 60 70 be legal, accounting, financial or investment advice and does not50 6060 60 constitute financial product advice. The Australian Industry Group 50 50does 40 not invite and does not expect 50 any person to act or rely on any 4040 30 40 statement, opinion, representation or interference expressed or implied in 3030 20make this publication. All readers must 30 their own enquiries and obtain their 2020 10 own professional advice in relation 20 to any issue or matter referred to 1010 0 herein before making any financial or Transport equipment Miscellaneous 10 Machinery and equipment Machinery and equipment Sigificantly Mo other decision. The Australian Industry Machinery and equipment TOTAL Further Information Results are based on responses from over 200 companies from a rotating sample of manufacturers. An evaluation of the Australian PMI as well as p Miscellaneous 0 for positive Group accepts no responsibility 0 any Miscellaneous 0 Sigificantly Mode Mod other economic research and analysis can be obtained from the Ai Group website on http://www.aigroup.com.au/economics. Miscellaneous 0 10 20 30 40 50 60 70 80 90 act or omission by any person relying 100 Sigificantly TOTAL M Sigificantly posi TOTAL po positive Results for capacity utilisation, average wages and output prices to June 2007 based on quarterly surveys. From this pointTOTAL will be collected in the monthly PMI survey. data positive Ma p positive December 11in 10 20Index 30 40 November 11 70 40 50 50 60 60 70 80 80 90 100 whole or in part upon the contents 90 100 ** Number of months moving in current direction. 0 0 Diffusion 20 30 10 0 10 20 30 40 50 60 70 80 90 of this publication. 100 May May 1 New monthly seasonal adjustment factors derived directly from the Australian Bureau of Statistics were applied in April 2011. Diffusion Index November 11 December 11 November 11 December 11 AIG10889 Ma Diffusion Index November 11 December 11 Diffusion Index Visit http://www.aigroup.com.au/economics for further economic analysis and information.

November 2011 47.8 49.6 45.3 48.1 50.5 45.9 61.6 53.4 44.6 56.3 74.5

Monthly Change Australian PMI Direction Rate of Change Trend** (Months) 2.4 Australian PMI Expanding From contracting 1 Australian PMI Increasing Decreasing 1.4 Australian PMI Expanding From contracting 1 Increasing Decreasing Food and beverages Increasing 0.7 Contracting Slower 2 Decreasing Increasing Decreasing 1.8 Contracting Textiles Slower 6 Food and beverages Food and beverages Food and footwear Clothingand beverages Textiles Textiles 3.4 Expanding Textiles Faster 2 Wood products and furniture Clothing and footwear Clothing and footwear 6.9 Paper, printing and publishingFrom contracting Expanding 1 Clothing and footwear Wood products and furniture Wood products and furniture WoodExpanding products and furniture Chemicals, petroleum, coal 0.3 Paper, printing and publishing Faster 115 Paper, printing and publishing Paper, printing and publishing Construction materials Chemicals, petroleum, coal -6.0 Chemicals, petroleum, coal From expanding Contracting 1 Chemicals, petroleum, coal Basic metals Construction materials Construction materials 1.8 Contracting metals Slower 9 Construction materials Fabricated Basic metals Basic metals 4.8 Expandingmetals Faster 32 TransportBasic metals equipment Fabricated Fabricated metals Fabricated Machinery and equipment 1.8 pt Increase metals na na Transport equipment Transport equipment

% of respondents % of respondents % of respondents % of respondents