Manufacturing News

Manufacturers continue to struggle against ‘significant headwinds’

Manufacturing contracted slightly during August, down 0.1 points to 43.3, remaining well below the 50-point mark separating expansion from contraction.

According to the latest Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) figures, the strong Australian dollar, sluggish domestic demand and increased competition from overseas were all to blame for Australia’s manufacturing contraction. 

Australian Industry Group Chief Executive, Heather Ridout, said the continued weakness is evidence of the “extremely challenging” business environment faced by our manufacturers.

However, she says the industry has a bright future in Australia – regardless of the time tough time it is experiencing at the moment. 

"The industry has a very positive future in Australia. However, we need decisive government action and a long-term forward-looking strategy for manufacturing that would contribute to creating the most competitive environment for the sector to flourish and survive through the resources boom,” she said.

“We also need immediate measures to support and improve incentives to invest and innovate. All of this action should be developed in consultation with industry.” 

PwC Australian Head of Industrial Products, Graeme Billings, said manufacturers are struggling against very significant headwinds.

“Innovation and productivity improvements are absolutely critical to ensuring manufacturers’ survival in the longer term.  While initiatives to improve innovation needs to come from businesses themselves, all relevant stakeholders need to demonstrate appropriate support in these times of uncertainty," Billings said. 

Australian PMI Key Findings for August

•         The manufacturing industry weakened further in August – down 0.1 points to 43.3 (readings below 50 indicate a contraction in activity).

•         The strong Australian dollar, weak domestic demand and increased overseas competition were cited as underlying factors inhibiting manufacturing activity.

•         The decline in activity in August was particularly pronounced in the paper, printing and publishing; textile; miscellaneous manufactures; and fabricated metal sub-sectors.

•         The food & beverage and clothing & footwear sub-sectors were the only sub-sectors to expand in August.

•         New orders continued to decline in August, although the rate of contraction eased.

•         Inventories fell further in August.

•         Manufacturing exports continued to contract in the month.


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