Published 01-08-2019
| Article appears in August 2019 Issue

MANUFACTURING EDGES BACK FROM THE BRINK

01-08-2019

Australian manufacturing rallied in July, with the Ai Group’s Performance of Manufacturing Index edging back into positive territory at 51.3 points, following June’s mild contraction. The improved performance comes despite sharp falls in both sales and production, but backed by improvements in new orders, exports and supplier deliveries.

The ever-growing food and beverage sector continues to lead the growth (albeit slightly down to 59.2) and the building materials sector continues to defy the go-slow in residential construction with a new high of 63.7. On the down side, the metals sector continues its serious contraction at 35.4 and the machinery and equipment sector is still below par at 48.8.

Some of the underlying figures do seem to indicate that the industry is still struggling to stay ahead. Although the rate of growth of input prices is easing, at 66.3 that is still a worryingly high figure when compared with a selling price index that is becalmed at 49.2.

Meanwhile, wage growth is easing at 56.9, in spite of the 3 per cent increase in the minimum wage, which came into effect at the start of the month.

Ai Group Chief Executive Innes Willox was optimistic in announcing the results, saying: “While production fell, export sales were stronger partly due to the downward drift in exchange rates over the first half of 2019 and partly due to strong overseas demand for food, beverages, pharmaceutical and cosmetic products.

“Pressures on manufacturers’ margins continued in July in the face of weak domestic sales and selling prices even though the pace of increases in wages and other input costs eased. In encouraging pointers for the months ahead, both new orders and employment expanded in July,” he concluded.

 

 

RELATED NEWS

  1. It’s never too early to get organised to protect and maximise the future value of your business.
    For most owners, their business is their number one asset, investment and income stream. Yet, according to recent research by accounting and advisory firm William Buck, 55% of owners do not have an exit...
  2. The Reserve Bank of Australia (RBA) has joined other major central banks, including the US Federal Reserve and the Reserve Bank of New Zealand, in going harder in the fight against inflation.
    On Tuesday, 7 June 2022, the RBA delivered a rate hike of 50 basis points, taking the cash rate to 0.85%....
  3. According to the Deloitte 2022 Manufacturing Industry Outlook, The global manufacturing industry is building back fast, undeterred by significant labour and supply chain challenges. To maintain this momentum, Deloiite suggests that manufacturers navigate elevated risks while advancing...