Manufacturing activity falls but pace easing

THE manufacturing industry continued to deteriorate in March although the rate of decline has eased with the Australian Industry Group - PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI®) up slightly by 1.7 points to 33.4. This is well below the 50-point mark that separates expansion from contraction.

THE manufacturing industry continued to deteriorate in March although the rate of decline has eased with the Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI®) up slightly by 1.7 points to 33.4. This is well below the 50-point mark that separates expansion from contraction.

Manufacturing activity fell in all states except Tasmania where it rose slightly. The largest falls were recorded in New South Wales and South Australia.

Australian Industry Group (Ai Group) Chief Executive, Heather Ridout, said the manufacturing industry continues to endure extremely challenging economic conditions with the March Australian PMI® showing that all sectors in all states, with the exception of Tasmania, declined in March.

“Production, capacity utilisation and exports remain in the doldrums, with the new orders reading — although a little up from February – not indicating any early pick up. As a result, employment fell across the board while wages growth continued to ease.

“The Australian PMI® suggests that economic conditions have not bottomed in the economy and that the outlook remains uncertain. Business is hunkering down and hoping that conditions will improve in the second half of the year. Whether they will, remains to be seen,” Ridout said.

PricewaterhouseCoopers Global Leader of Industrial Manufacturing, Graeme Billings, said the Australian PMI® for March shows that there is no respite for manufacturing firms as the economic downturn in Australia and overseas adds to existing long-term pressures for strategic responses to the increasingly competitive global market in manufactures.

“The short-term pressure for change to maintain margins requires rapid responses to weaker demand including sustaining cash flow through effective pursuit of accounts receivable and where necessary cutting back and controlling expenses.

“For longer-term challenges, it is important to continue to focus on strategies designed to reduce long-term costs and boost productivity including through the retention of key skills, optimisation of supply chains and product and process innovation,” Billings said.

Leave a Reply