May PMI drops but manufacturers are still upgrading

The Australian manufacturing sector continued to contract in May with only three of the twelve sub-sectors experiencing growth — but last week’s NMW proved businesses are still buying.

The figures came from the latest Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI). 

The seasonally adjusted index was broadly unchanged in May falling just 0.7 points to 47.7 (readings below 50 indicate a contraction in activity). 

Ongoing weak domestic demand, cheap imports and the strong Australian dollar contributed to the poor performances across manufacturing including in clothing & footwear and chemical, petroleum & coal products sub-sectors.   

This was evident throughout most of the country with manufacturing expanding only in Western Australia and Tasmania. 

This is sober news for manufacturers struggling against a high Australian dollar and government funding cuts.

Still, there is hope on the horizon, with Australia’s largest manufacturing exhibition, National Manufacturing Week, reporting attendee levels rose 25% during this year’s show, which was held in Melbourne last week.

According to organisers Reed Exhibitions, the show was a real success, despite stories of general doom and gloom surrounding the manufacturing industry for some time.

These positive figures suggest that Australian manufacturing is starting to experience an upswing in activity, with more managers thinking about buying again – even if the May PMI is yet to reflect this.