Manufacturing dips further in September

Innes Willox … ‘sharp falls’

Another drop in manufacturing new orders contributed to a further decline in overall manufacturing activity in September according to the latest industry data.

The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) fell 1.2 points to 44.1 in the month.

Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.

A pullback in the mining sector, soft demand, stronger import competition, the strong Australian dollar and rising utility costs were among the factors cited as impacting manufacturing activity in September.

Surprisingly, the three sub-sectors that expanded in August – food & beverage, wood products & furniture and miscellaneous manufacturers – fell back into the red in September. 

Meanwhile, paper, printing & publishing (69.6) and textiles, clothing & footwear (55.3) saw expansions in activity in September.

Australian Industry Group Chief Executive, Innes Willox, said: "The softer conditions for manufacturers recorded in September looks like continuing in the months ahead with a sharper decline in the forward-looking new orders sub-index. 

“Suppliers to the mining sector, which have generally been a source of encouraging news in recent years, reported sharp falls in new orders as the mining sector responds to reduced prices and an increased likelihood of reductions in demand, he said.  

 "The ongoing strength of the Australian dollar, together with further rises in wages and input costs and a continuation of reported falls in selling prices, exacerbated the squeeze on margins that has been evident for some time.  There are certainly no signs of any inflationary pressures that might inhibit further reductions in interest rates."