Manufacturing News

“Well-entrenched” pressures dragged manufacturing down in January, finds PMI

Today’s Australian Industry Group Performance of Manufacturing Index (PMI) showed an 11th straight month of shrinkage for the industry.

The seasonally-adjusted national composite index showed a result of 40.2 for January, down from December’s 44.3. A result below 50 indicates a contraction.

Every sub-sector experienced a decline except for wood and paper products, though the contraction for every sector except petroleum, coal, chemical and rubber eased.

"The well-entrenched pressures that have been confronting the manufacturing sector for several years are being compounded by a slowing in the broader economy,” said the Ai Group CEO Innes Willox in a statement.

“The extent of the contraction is reinforced by the ongoing contractions in January of the production, employment, new orders and exports sub-indicies of the Australian PMI®”

Bloomberg reports that the result is a 3 1/2 –year low for the industry, with the high dollar trumping any benefit that might have been experienced from lower interest rates. The Reserve bank cut rates when it met in December, but is not expected to do so again when it convenes on February 5, according to Dow Jones Newswires.

Respondents for the PMI survey listed soft demand and the high dollar as issues. The survey also noted that input costs and wages were up for January, while selling prices were down.

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