Manufacturing activity contracted again in March, due mainly to a fall in production.
The latest seasonally adjusted Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) was down 0.7 points to 47.9 last month. (Readings below 50 indicate a contraction in activity).
While new orders rose in the month (up 2.3 points to 52.3) manufacturing production fell into negative territory (49.2).
Manufacturing selling prices took a tumble falling 11.4 points.
Australian Industry Group Chief Executive, Innes Willox said the latest figures indicate that large parts of the economy are failing to gain traction.
“Subdued local demand and the newly resurgent dollar are weighing heavily against the efforts of manufacturers to rebuild their sales base in Australia and internationally, he said. “High local production costs and rising input prices are still major barriers for those who are trying to compete internationally and against imports in the domestic market.” The Reserve Bank has signaled a more positive outlook and a hold on interest rates for 2014, but from a business perspective, the outlook is much more fragile.
The much-anticipated housing recovery remains weak in most states, consumer spending on non-food goods and local services is muted, and business attitudes to investment and hiring remain cautious.
“In this fragile atmosphere, we need to ensure that all relevant policy settings are supportive and not hindering the rebalancing our economy requires,” Mr Willox said.
The food and beverage sub-sector continued to lift in March and was one of four sub-sectors to expand.
The other industries to expand were petroleum, coal chemicals and rubber products (62.2), non-metallic minerals (66.9) and wood and wood paper products (55.6).