Local manufacturing enters uncharted territory

AUSTRALIAN manufacturing industry output fell for the eleventh consecutive month in April, continuing to trawl uncharted lows.

AUSTRALIAN manufacturing industry output fell for the eleventh consecutive month in April, continuing to trawl uncharted lows.

The seasonally adjusted Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI®) showed falls in all States.

The continuing drop in demand for goods saw producers cutting inventories at the fastest rate in the index’s history, with the Australian PMI falling 3.1 points to a record low of 30.1: well below the 50-point mark that separates expansion from contraction.

Australian Industry Group (Ai Group) Chief Executive, Heather Ridout, said there was no let up for manufacturers in April, with weakness and uncertainty continuing to characterise the sector.

“Weak demand in both domestic and global markets contributed to the ongoing contraction of the sector.

“However, the inventory index is at record lows, which should suggest that production levels will have to lift soon to replenish stocks,” Ridout said.

According to the Ai Group CEO, the roll-out of infrastructure projects and a lift in housing starts have the potential to translate into new orders for the sector if these are made known to local industry.

“A concerted effort to ensure that Australian-based companies are aware of the opportunities and have a fair and open access to them is important. Ai Group will be pushing this agenda.”

PricewaterhouseCoopers Global Leader of Industrial Manufacturing, Graeme Billings, said the April Australian PMI clearly “illustrates the ongoing squeeze on manufacturers’ profitability”.

“Cutting back expenditure for marginal activities forms part of the strategy for underpinning profit margins until markets recover.”

Billings stresses that it is important for companies to look beyond the downturn and concentrate on long-term profitability.

“Retaining skilled workers, building supply chains to reduce costs and innovation across processes and products remain critically important,” he said.

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