Sector still shrinking, budget hurts confidence: Ai Group PMI

Australia’s
manufacturing sector remains in contraction, according to the Australian
Industry Group’s PMI, released this morning.

The Ai Group’s PMI for May recorded a result of 49.2, slightly below 50, the point which separates expansion from contraction.

The overall result was an improvement on April’s by 4.4 points.

Four
of eight subsectors experienced growth, led by Wood and Paper Products (55.8).
Food and Beverage contracted for the first time since February last year.

There was a “dampening in confidence following the Federal Budget” noted among the respondents.

“The manufacturing sector continues to be
buffeted by weak household demand, a lack of business confidence and fierce
competition in both domestic and export markets, heightened by the renewed
strength in the Australian dollar,” said AiG chief executive Innes
Willox in a statement.

“The
public reaction to the Federal Budget appears to be weighing negatively on
consumer sentiment and business confidence.”

The
Production and New Orders sub-indices both expanded and registered results of 51.6 and 55.1 respectively.