Manufacturing activity grew for the fourth consecutive month in November with the latest Australian Industry Group - PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI®) remaining relatively steady, down 0.5 points in November to 51.2.
The modest expansion reflects the sluggish growth in new orders and a fall in inventories (readings above the 50 point level indicate an expansion in manufacturing activity).
Ai Group Chief Executive, Heather Ridout, said: “November's Australian PMI® suggests manufacturers remain cautious. Despite a lift in new orders in recent months, manufacturers are not convinced that conditions justify rebuilding their inventories.
Nevertheless, a lift in production across manufacturing sectors contributed to the first rise in employment in almost two years.
"The modest growth in activity in November underlines the tentative nature of the recovery. While new orders growth remained in positive territory, the stronger pace of improvement evident in October was short-lived.
These results suggest there remains a considerable way to go before activity recovers from the setbacks over the past eighteen months.
“The strength of the Australian dollar is proving to be an important barrier to stronger recovery, adding to the need for caution in raising interest rates," Ms Ridout said. PricewaterhouseCoopers Global Head of Industrial Manufacturing, Graeme Billings, said: "Manufacturers’ profit margins remain under severe pressure despite the modest improvement in new orders that we have seen in recent months. The lift in growth in wages and input costs in November, at the same time as selling prices continue to fall, will require a renewed focus on cost management and continued emphasis on lifting productivity."