Australian manufacturing sector economic trends

The Australian manufacturing sector has transitioned from a period of record-breaking performance in the food and grocery sub-sector to a more complex landscape of broad-based growth tempered by rising operational costs.

During 2024–25, the food and grocery manufacturing industry reached historic levels of turnover, totaling $182.6 billion, and saw capital investment rise by 16 per cent. This growth supported over 301,000 jobs, with significant employment located in regional communities. However, the industry noted challenges regarding supply chain disruptions and energy costs.

By the 2026/27 financial year, while the broader manufacturing industry returned to growth with division earnings rising 1.6 per cent, profitability has come under pressure. Total industry expenses rose by 7.8 per cent, driven by the cost of goods and materials. Specific sub-sectors, such as industrial machinery, have experienced a significant 79 per cent year-on-year decline in average stock on hand due to uncertain demand and rising freight, labor, and financing costs.