AIG PMI shows no improvement as manufacturing continues to be squeezed in March

After a what was described as a "tentative" improvement in its results for February, the monthly Australian Industry Group Performance of Manufacturing Index (PMI) showed the industry continued to shrink in March.

The overall PMI dropped 1.2 points for last month to 44.4. Any result under 50 signifies a contraction.  Wood and paper was the only subsector to grow, and only slightly at 50.1 (down from 57.6 last month).

After growing strongly with a score of 57.9 in the previous round of results, the food, beverage and tobacco sub-sector dipped under 50.

The Ai Group’s CEO Innes Willox noted that conditions continued to hurt manufacturing, which would benefit from another cut interest rates, though these are predicted to remain unchanged when the Reserve Bank meets today

“The strong dollar, falling selling prices, further cost pressures and the weakness of commercial and residential construction continue to take their toll,” said Willox in a statement.  

He said that the result was a disappointment after "tentative signs of a pick-up in February."

“The decline in export earnings is particularly worrying and reflects soft demand in a number of markets, intense competition and, of course, the high dollar,” said Willox.

AAP notes that the result marked the 14th straight month of contraction.