Judo Bank Manufacturing PMI

What is Judo Bank Australia Manufacturing PMI?

The Judo Bank Australia Manufacturing PMI, or Purchasing Managers' Index, measures the direction of factory change from the prior month. S&P Global, a firm, compiles a monthly survey of about 400 manufacturers picked by sector and size, in a program covering over 40 countries. Judo Bank, a challenger bank for small firms, sponsors and publishes it, with records back to May 2016. It covers only factories, not services, runs 0 to 100, and leads output, jobs, GDP and inflation data without matching them.

When is it released and what happens each release?

Responses are collected in the 2nd half of each month and ask change from prior month. Flash factory, services and composite output appear together about 1 week before finals, on about 85% to 90% of replies. Final factory results arrive on the 1st working day of the next month in Sydney morning, shifting for holidays. Final brings output, orders, jobs and price gauges, replaces flash, and only seasonal factors may later revise it.

What moves Judo Bank Australia Manufacturing PMI?

5 weighted parts form the headline, each tracking one slice of factory activity.

• New Orders, 30%: captures incoming demand and order book strength.
• Output, 25%: captures production volumes versus prior month.
• Employment, 20%: captures hiring versus redundancies and leavers.
• Suppliers' Delivery Times, 15%: captures supplier lead times, flipped so slower delivery lifts the index.
• Stocks of Purchases, 10%: captures input inventory holdings.

The December 2023 final (reported January 1, 2024) read 47.6, down from 47.7, a 10th straight sub-50 month. Output fell to 45.5, its sharpest fall since May 2020, while new orders fell for a thirteenth straight month but declined more slowly. Jobs fell fastest since August 2020, input costs rose faster, and selling prices rose at a quicker pace, yet both stayed below average. Twelve-month confidence rose to a 3-month high yet stayed weak, and Judo Bank's economist called such levels a soft landing, or gentle slowdown. Small headline moves thus hid big shifts across parts.

How is Judo Bank Australia Manufacturing PMI calculated?

1. Diffusion index, or breadth score: for each question add % saying higher to half the % saying same, giving 0 to 100. For example, 30% higher, 45% same and 25% lower gives 52.5.
2. Inverted delivery times: flip supplier lead times so slower delivery rises like stronger demand.
3. Weighted headline: combine 5 scores as 0.30 orders plus 0.25 output plus 0.20 jobs plus 0.15 delivery plus 0.10 stocks. With inputs 52.5, 50.0, 47.5, 48.0 and 48.0 the result is 49.8, below 50.
4. Seasonal adjustment, or calendar smoothing: adjust each index for normal seasonal swings and read the adjusted headline.
5. 50 line: above 50 means broad growth from prior month, 50 means no change, below means broad decline.

Key point: A higher reading below 50, say 47.7 to 48.7, still means slower decline, not growth, since it tracks breadth not size. Only a move above 50 means broad growth, and the composite output is not directly comparable.