Australia’s Manufacturing Sector Contracts in October 2025
Australia’s manufacturing sector shrank in October, marking its first contraction in 2025 as the Purchasing Managers' Index (PMI) dropped below 50, indicating lost momentum after months of growth.
Key Data and Trends
- The S&P Global Australia Manufacturing PMI declined from 51.4 in September to 49.7 in October, ending a nine-month expansion streak.
- Demand weakened both domestically and internationally, with new orders decreasing at the fastest rate in ten months.
- Businesses focused on reducing existing stockpiles instead of placing new orders.
- Manufacturers cut jobs for the first time since early 2025.
- Purchases of new materials dropped, leading to shrinking inventories.
Operational Challenges and Cost Pressures
"Shipping delays and rough weather kept finished goods from moving out the door, causing stock to build up."
Input prices surged due to higher costs for materials, electricity, and freight, reaching their highest level since April. However, companies managed only modest price increases amid weak demand and intense competition.
Outlook
Despite the challenges, some manufacturers remain cautiously optimistic about future prospects.
Summary
Australia’s manufacturing sector faced a notable slowdown in October 2025, marked by contracting output, falling orders, job reductions, and rising costs, although some hope persists for recovery.