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      Australia's Manufacturing Sector Contracts as New Orders Decline

      Australia's manufacturing sector experienced a contraction in September, with the S&P Global Australia Manufacturing Purchasing Managers' Index (PMI) dropping to 49.6 from 52.0 in August. This marks the first decline in new orders since June, indicating a significant slowdown in factory activity. A reading below 50 signifies contraction, and this decline is the sharpest observed in 21 months.

      The decrease in new orders was attributed to rising prices, intense competition, and weaker underlying demand. Export orders also fell after a brief increase in August. Output declined for the second consecutive month, with manufacturers reducing production in response to the drop in work. This contraction has led to a marginal reduction in manufacturing headcounts, the first decline in five months, as companies face both resignations and redundancies.

      Supply chain disruptions, particularly due to the ongoing conflict in the Middle East, have further complicated the situation. Supplier delivery times have lengthened, and while input costs remain high, the rate of inflation has eased slightly. Manufacturers have been cautious in passing on these costs to clients due to increased competition, resulting in the slowest rise in selling prices in seven months. Despite these challenges, manufacturers maintain a positive outlook for the next 12 months, anticipating that new business developments will boost sales. However, confidence has dipped to a four-month low amid the recent downturn in new orders.

      © 2026 KLEA News. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

      Source: KLEA News

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