MANUFACTURING activity fell for a fourth successive month in September, impacted by a weakening world economy and a decline in new orders affected by higher official and commercial interest rates which continue to squeeze consumer demand.
The Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI®) showed despite slowing activity, September was a relatively stable month for manufacturing with the PMI up by 0.2 points to 47.2 and remaining below the key 50.0 level separating expansion from contraction..
According to Australian Industry Group (Ai Group) Chief Executive, Heather Ridout, the ongoing decline in new orders reported in the Australian PMI® suggests that the weakness in manufacturing is likely to persist, particularly with employment growth showing signs of losing momentum.
Ridout also said a further reduction in official interest rates by the Reserve Bank would be welcomed to help ease these conditions.
PricewaterhouseCoopers Global Leader of Industrial Manufacturing, Graeme Billings, said given the continuing uncertainties in the world economic outlook, these pressures on manufacturers and profitability is unlikely to ease over the next few quarters.
“In the absence of any short-term improvement in the economic outlook, businesses need to continue with stringent cost management and to maintain a focus on building long-term profitability through broadening of market and product scope, deepening global supply chains and strengthening their skills bases,” Billings said.
However, exports rose solidly in September and manufacturers continued to cite positive effects on activity from mining related demand.