The manufacturing sector experienced it seventh straight month of growth in July with new orders, stronger levels of production and more deliveries suggesting that the manufacturing industry is fighting back.
The seasonally-adjusted Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI) rose 1.5 points to 54.4 in July heralding the third consecutive quarter of growth in manufacturing (readings above 50 indicate an expansion in activity).
The big winners of the month were the transport equipment, fabricated metals, basic metals and machinery and equipment sub-sectors which experienced strong demand in the mining and infrastructure sectors.
Consumer-related sectors also bounced back during the month, however the high exchange rate continues to affect manufacturers with exports falling.
Growth was strongest in New South Wales, Queensland, South Australia and Tasmania.
Australian Industry Group chief executive, Heather Ridout, said manufacturing recovery continued in July despite the waning impacts of fiscal stimulus and above-normal business interest rates.
“Private sector demand is slowly re-emerging as a source of growth. While Australia remains the stand-out economy globally, the environment is also patchy and volatile and the world economy faces renewed uncertainty,” she said.
“Manufacturers will be looking for policies in a post-election environment that will help secure a full recovery in the sector and foster longer-term national productivity growth. Interest rates and fiscal policy need to be set to support further expansion.”
PricewaterhouseCoopers Global Head of Industrial Manufacturing, Graeme Billings, said manufacturers continue to regain lost ground and over the coming year need to look for business expansion opportunities by continuing to invest, innovate and upgrade the skills of their workforces.
“The sector faces important underlying challenges from international competition and the strength of the domestic currency due to the expected continued strength of commodity prices. These challenges call for a combination of long-term business strategies and supportive policy settings,” he said.