The manufacturing sector moved into negative territory in March as the strong Australian dollar and softer demand continued to affect growth in the sector.
The latest seasonally adjusted Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) fell 1.8 points to 49.5 in March (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).
Seven of the 12 sub-sectors recorded declines in activity – up from six the previous month – led by drops in the clothing and footwear and wood products and furniture sub-sectors.
On a positive note, ongoing demand from mining projects resulted in another month of expansion for the transport equipment and machinery and equipment sub-sectors.
"Manufacturing is clearly having trouble building momentum towards recovery,” said Australian Industry Group Chief Executive Designate, Innes Willox.
“The relentless pressure from the dollar, weak domestic demand and a flat commercial and residential construction sector continue to inhibit manufacturing performance,” he said.
“This month’s negative Australian PMI result comes after three months of tentative growth. The fragility of the sector highlights the importance of the Federal Budget in maintaining programs that build productivity."