Industrial Production

IBISWorld forecasts the industrial production index to slump by 0.8% in 2024-25, to 99.7 index points. This decline is expected to be led by a decrease in mining production. Downward pressure will be placed on the production of Australia’s mining sector in 2024-25 as export prices for Aluminium, Iron Ore, Gold, and Nickel are expected to fall. In addition, households are increasingly feeling the impact of high utility prices during the cost-of-living crisis, which is driving a drop in demand for electricity, gas, water and waste (EGWW) in 2024-25. High interest rates aimed at targeting inflation are increasing the cost of borrowing and restricting business activity, which is expected to slow output in the manufacturing sector. Ongoing import competition is also expected to limit manufacturing output in 2024-25, contributing to an expected decline in industrial production over the year.

Manufacturing production volumes have stayed relatively stable over the past decade, despite facing fierce import competition, high operating costs and restrictive labour laws. Many domestic producers have found it difficult to overcome the comparative cost advantages of overseas producers. Over the past five years, Australian manufacturing production has risen. Production declines from foreign markets in import-affected industries have driven up demand for domestically manufactured goods, while greater health consciousness and premiumisation trends have boosted demand for local food products.