Small to medium-sized manufacturers in Australia achieved over $600,000 in average quarterly revenue, inventory management software firm Unleashed said in its latest report.
According to the most recent Unleashed Manufacturing Health Index, local production efforts by clothing manufacturers were rewarded with a modest 8 per cent rise in revenue last quarter. Over the past financial year, average revenue increased to $1.53 million, compared to $1.09 million in the previous year.
Unleashed cited the Australian Fashion Council’s recent announcement that it plans to reinvest in local clothing and textile manufacturing. The council estimates that 97 percent of Australia’s $28 billion fashion industry is made overseas.
“More than almost any other manufacturing subsector, clothing makers are facing huge downward pressure toward inexpensive offshore production. Though our data does skew toward B2B clothing makers, as opposed to the wider Australian high-end fashion industry, the data is clear that local production is starting to pay dividends,” said Jarrod Adam, Unleashed’s Head of Product.
The Australian Bureau of Statistics’ Producer Price Index data reveals a near 1 per cent price increase by manufacturers in the first quarter, contributing to higher sales revenues. Adam notes that the international context is crucial when analysing changes within the manufacturing sector.
“As much as it’s been a very positive start to the year from a sales perspective for Australian manufacturers, it’s also been hugely unsettling. Uncertainty is the enemy of good business, which is even more true of a goods maker who often looks at production on a six- to 18-month timeline,” said Adam.
“From our conversations with manufacturers, improving revenue has largely been a testament to Aussie resourcefulness, where businesses have taken the moment to seek out new products and markets. I’ve seen this from beer brewers shipping products to China, coffee roasters looking at canning, or makeup brands setting up shop in Korea.”
Despite the revenue increase, purchase orders fell sharply at the start of the year amid a challenging global political climate.
In the most recent quarter, the average number of orders across Australian manufacturers dropped to 177 per company, marking the lowest level since the fourth quarter of 2020, when volumes fell to 174 during the height of the pandemic.
Manufacturers also scaled back their inventory levels significantly. Average excess stock fell from $35,000 at the end of 2024 to $22,000 in the first quarter of 2025.
All but one of the 13 manufacturing subsectors reported reductions in overstock volumes, with food manufacturers making the steepest cuts.
Their average excess inventory dropped to $30,000, the lowest since 2020 and an 83 per cent decline from $177,000 recorded at the close of last year.
Unleashed’s Head of Product Jarrod Adam said a key factor influencing this shift may have been the weaker Australian dollar at the start of the year, which drove up the cost of imports.
“The cheap Australian dollar in the first quarter certainly loomed large for local manufacturers, who often rely on US-dollar denominated imports to create their products. It’s likely some makers would have looked to eat into their extra inventory to try and wait out the trade storms and currency volatility, before committing to large ongoing purchases,” said Adam.