Poor start to the year for Australian manufacturers

GLOBAL market turbulence contributed to a weak start to the year for Australian manufacturers with the Australian Industry Group - PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI) falling by 8.4 points in the month to 49.2 (falling below the key 50.0 level separating expansion from contraction).

GLOBAL market turbulence contributed to a weak start to the year for Australian manufacturers with the Australian Industry Group – PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI) falling by 8.4 points in the month to 49.2 (falling below the key 50.0 level separating expansion from contraction).

The January fall follows 19 consecutive months of growth for the sector and also reflects concerns about interest rates, lack of skilled labour and rising input costs, along with seasonal influences in regard to factory shutdowns over the holiday period.

The decline in activity was registered in declines in production, capacity utilisation, employment, new orders and deliveries. While stocks grew modestly, exports remained stable.

Activity expanded in five sectors in January, with growth strongest in the transport equipment; construction materials; basic metal products; fabricated metal products; and textiles sectors.

Ai Group Chief Executive, Heather Ridout, said the January Australian PMI outcome is clearly disappointing, “but needs to be seen in the context of a strong finish to 2007”.

“How events unfold in global financial markets and the future course of interest rates will be important in shaping the prospects for the industry in the months ahead.

“Nevertheless, at this stage manufacturers remain reasonably positive with moderate growth predicted for the year in the face of intensely competitive market conditions,” Ridout said.

PricewaterhouseCoopers Global Leader of Industrial Manufacturing, Graeme Billings, said the ongoing uncertainties around the outlook for the global economy are compounding the strong competitive pressures affecting manufacturing performance.

“Under these tough operating conditions an ongoing focus on cost control and increased operational efficiency is paramount to sustaining growth in profitability,” Billings said.

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