Industrial production

IBISWorld forecasts that the industrial production index will climb to reach 101.0 index points in 2025-26, increasing by 2.9% from 2024-25. This growth has been underpinned by rising demand from manufacturing and demand from electricity, gas, water and waste services.

Stronger demand for manufactured goods has resulted from the reorganisation of supply-chains since 2020-21 in response to global supply chain risks exposed by the pandemic. While inexpensive imports from Asia, along with offshoring, have weighed on manufacturing output and employment since the late 1980s, there has been some reshoring activity over the past five years for some advanced manufacturing industries like pharmaceuticals and renewable energy technology. Nonetheless, climbing natural gas and electricity wholesale prices since 2020-21 have dampened the growth of manufacturing output from reshoring, with former major plastics manufacturer Qenos and former architectural glass product manufacturer Oceania Glass falling into insolvency between 2023-24 and 2024-25 primarily because of high-energy costs.

EGWW (Electricity, Gas, Water and Waste services) industry activity has expanded since 2021, mainly due to rapid growth in renewables. Massive investment in solar, wind and batteries has driven Australia's clean energy transition, boosting electricity generation, supporting grid upgrades and reducing emissions, alongside rising demand from recent population growth. Furthermore, large circular energy initiatives since 2020-21, like Visy's Gibson Island Material Recovery Facility in 2023, have bolstered EGWW activity.

Demand from mining has fallen steadily from 2020–21 to 2025–26. Weaker demand from China, Australia's main mineral export partner, along with declining global commodity prices for key metals like iron ore, has put pressure on the mining sector. Numerous mines, particularly coal mines, have closed as Australia has made stronger efforts to shift towards renewable energy sources.

The decline of mining has limited the positive effects from rising demand from manufacturing and EGWW activity. That's why the index has remained fairly stable over the past five years. Overall, IBISWorld forecasts the industrial production index to inch upwards by an annualised 0.1% over the five years through to 2025-26.