The Australian manufacturing sector slowed sharply last month.
The Australian Industry Group’s Australian Performance of Manufacturing Index fell 5.4 points to 52 points, the weakest result since October 2017.
While any number above 50 still points to expansion, the contraction could be a significant point of concern.
Nonetheless, the index has been expanding for 22 months. The latest figures however show it is growing at a slower pace.
Sales dropped markedly by 15.7 points to 45.5 points in July, its lowest result since early 2016, although the sale sub-index tends to be volatile around the end of each financial year.
Higher production costs, with an increase in wages, were cited by manufacturers as factors.
Many noted the increase in wage rates from 1 July, the date when the Fair Work Commission’s 3.5 per cent minimum wage rise came into operation.
The markets will be watching closely to see how the figures for construction and services are tracking to get an idea of where the Australian economy is heading.