FX.co ★ Australia Manufacturing Contraction Sharpest in 21 Months

The S&P Global Australia Manufacturing PMI slipped to 49.6 in September 2026, coming in slightly above the flash estimate of 49.3 but down from 52.0 in August. This signaled the sharpest deterioration in manufacturing conditions in 21 months, as a renewed decline in new orders — the first in three months — reflected intense competition, rising prices, and softer demand. New export orders also fell after expanding in August.

Weaker demand fed through to production, with output contracting at the fastest rate since December 2024, while manufacturing employment declined for the first time in five months. Backlogs of work continued to fall, extending their uninterrupted decline to a 17th consecutive month. Purchasing activity was cut back at the quickest pace in four months.

Supplier delivery times lengthened further, with firms reporting ongoing disruption from shipping issues in the Middle East and severe weather conditions in North Asia. Input cost inflation moderated slightly but remained elevated, driven by higher raw material, oil, and transport costs. In contrast, output price inflation slowed to its weakest pace in seven months. Business confidence slipped to a four-month low.