Australia’s manufacturing industry raised the bar during December, with the latest Performance of Manufacturing Index (Australian PMI) rising 2.4 points to 50.2, indicating expansion for the first time in many months.
Metals, paper, printing and publishing, and transport equipment manufacturers raised output the most.
However, the fabricated metals, chemicals, petroleum and coal products, construction materials, and textiles sectors experienced production loss throughout the month.
Across the industry, production levels and supplier deliveries increased in December. Profitability for companies working in the industry fell however, due to a range of factors including wage rises as a result of recent industrial disputes.
According to Australian Industry Group’s outgoing chief executive, Heather Ridout, December’s PMI results indicated a “better end to 2011 than might have been anticipated,” especially given the tough operating conditions local manufacturers experienced throughout the year – including a looming carbon tax, tougher overseas competition, consumer hesitation, and higher utilities costs.
Ridout claims December’s 2.4-point PMI rise is evidence of how hard Australian manufacturers are working to weather the storm. However, Ridout warns that the manufacturing industry still has a tough struggle ahead.
“The result points to the resilience of Australian manufacturers against formidable headwinds,” she said, announcing the PMI results, which are put together on a monthly basis by Ai group in collaboration with PricewaterhouseCoopers.
“However, it needs to be borne in mind that the majority of the sub-sectors recorded declines, highlighting the continuing impact the high dollar, soft domestic demand and the uncertainty in the global economy are having on the industry.
“Therefore, while the tentative pick-up in manufacturing activity is encouraging, clearly the sector remains vulnerable to any renewed downturn in the global economy and to the underlying structural pressures associated with strong commodity prices."
Other sectors that helped increase the production sub-index to 51.0 were food and beverages, clothing and footwear; wood products and furniture, and basic metals – all of which saw ‘significant’ rises during the month.
This is good news for the clothing and footwear industry, which experienced a tough year in 2011, with various companies closing down and going offshore.
Just before Christmas, the government announced a pool of $2.5 million would be available for small businesses working in the textiles, clothing and footwear (TCF) sectors; companies can apply for up to $50,000 each to help improve their operations.
The government has also put aside a fund to help the struggling steel processing sector, with BlueScope Steel receiving a $100 million advance on future funding to help it recover loss recorded last year.
[Image courtesy of SMH.com.au]