Following a June result that suggested the sector only narrowly missed out on growth, the Australian Industry Group Performance of Manufacturing Index (PMI) survey has shown a slump to an overall result of 42.0.
The PMI, a seasonally-adjusted national composite index covering the industry and which comes out at the beginning of each month, indicated a 25th straight month of decline in the industry's output.
Any result under 50 indicates contraction.
"The Australian PMI shows Australian manufacturers have had a poor start to the new financial year and have failed to build momentum after the promising uptick in June,” said Innes Willox, the Ai Group’s CEO.
“Manufacturers are telling us that, while the fall in the Australian dollar and the May interest rate cut have been extremely welcome, they have not yet been enough to turn around a very challenging business environment, locally and internationally.”
The only subsector to record a positive result was Food and Beverage.
Among responses, the Ai Group notes that the federal election – the date of which is still unknown – has hurt confidence among some businesses.
“15% identified the looming election and political uncertainty as detracting from investment,” according to the survey.