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Detailed Australia PMI data provided for three states: Victoria,
New South Wales and Queensland
Output growth consistently stronger in Queensland since middle
of 2020
Victoria and NSW hit by subsequent lockdowns and weaker services
activity growth
IHS Markit's Australia PMI data have recently been expanded in
order to delve more deeply into the regional and sectoral trends
affecting business conditions across the manufacturing and services
industries. In this article we present our analysis of PMI data
covering three key Australian states: Victoria, New South Wales and
Queensland. This complements initial findings from our recent
research into how different sectors are performing, presented
here.
To conduct this state-level analysis, we have divided the survey
responses conducted across the country's manufacturing and services
panels into their respective geographic locations. Based on the
resulting sample sizes, we are able to generate diffusion indices
for the three most populous states in Australia, including all
indicators normally found in our composite-level analysis.
This method allows us to compare each state's monthly business
performance and offer insights into growth trends and particularly
the impact of the coronavirus disease 2019 (COVID-19) pandemic.
Queensland records stronger growth in output and new
business
In March 2020, Australia joined much of the world in enacting
strict lockdown rules in order to contain the spread of COVID-19,
resulting in an unprecedented economic downturn, as reflected in a
sharp fall in the Australia PMI's Composite Output Index. With the
first wave of cases proving small in comparison to other countries,
restrictions were eased, and the index returned to growth territory
last June, with subsequent measures becoming more varied at a state
level.
Of the three states monitored in this analysis, Queensland has
seen a consistently stronger rate of output growth since the second
half of 2020. The Composite PMI Output Index has averaged 59.8 from
July 2020 to March 2021, compared to averages of just 53.7 in New
South Wales and 52.7 in Victoria.
Manufacturing and services data show that Queensland has
excelled in both of these broad sectors during this period,
although there was a greater outperformance among service
providers. This could largely by explained by the number of
COVID-19 cases by region: Queensland has only seen roughly 1,500
cases to date, compared to 20,000 in Victoria and 5,000 in New
South Wales. As a result, service sector businesses in Queensland
have enjoyed relatively more relaxed virus containment and social
distancing measures, and have hence been able to recover more
quickly from the initial downturn in April and May 2020.
By contrast, Victoria saw a second wave of COVID-19 cases during
the third quarter of 2020, leading to further social distancing
restrictions and the closure of its border with New South Wales.
Output fell sharply, albeit not as steeply as seen in the previous
quarter. A snap lockdown in early-2021 also resulted in a further
fall in activity, according to February data.
New South Wales has seen a more consistent recovery in output
than in Victoria, with growth running close to the nationwide trend
since the middle of 2020, and both the manufacturing and service
sectors recording a stronger performance. In comparison to
Queensland, however, average services growth was notably softer,
with restrictions on hospitality capacity and inter-state travel
noted as contributing factors. The state also experienced a short
lockdown in December due to an outbreak of cases in Sydney.
New orders PMI data highlight how the relative strength of
output growth in Queensland was supported by a sharper rise in new
business inflows compared to Victoria and New South Wales since the
middle of last year. In all but one of the last nine months,
private sector sales in Queensland have increased to a greater
extent than that seen across Australia. This outperformance was
driven by the services sector, while manufacturing new order growth
was in fact weaker in Queensland than in Victoria during this
period.
States see similar job market trends
Composite PMI Employment Indices meanwhile signal that job
markets across the three monitored Australian states have been
broadly similar since last July, despite the output variations.
Whilst Queensland enjoyed a stronger recovery in both output and
new business, the average level of employment growth over the past
nine months matched that seen in Victoria and was only slightly
faster compared to New South Wales.
Moreover, job numbers have only consistently risen in each of
the last five months in Queensland, Victoria (and nationwide), in
line with a notable pick up in demand growth across the country. In
the former, outstanding business levels only began to rise from
February, suggesting that capacity pressures have only recently
contributed to hiring activity.
Broad-based price increases
The PMI data also suggests that the recent quickening of input
price inflation in Australia has been widespread, with panellists
linking the increase in costs to higher raw material prices and
wages. Notably, New South Wales recorded the fastest rate of
inflation since the survey began in 2016 during March (as did
Australia as a whole), and Victoria posted its record high in
February.
In a time where state-level COVID-19 restrictions are still
changing and reacting to virus outbreaks, these monthly data are
crucial to providing insights into regional economic trends and
help businesses make sense of the impact of the pandemic.
Purchasing Managers' Index™ (PMI™) data are compiled by IHS Markit for more than 40 economies worldwide. The monthly data are derived from surveys of senior executives at private sector companies, and are available only via subscription. The PMI dataset features a headline number, which indicates the overall health of an economy, and sub-indices, which provide insights into other key economic drivers such as GDP, inflation, exports, capacity utilization, employment and inventories. The PMI data are used by financial and corporate professionals to better understand where economies and markets are headed, and to uncover opportunities.
