Significant declines across transport equipment, textiles and miscellaneous manufacturing, largely due to the strong Australian dollar, kept the manufacturing sector in negative territory in April, according to the latest industry data.
The Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) rose just 0.5 points to 48.4 to remain below the 50 point level separating expansion from contraction.
New orders fell again in the month, with nine out of the 12 sub-sectors experiencing a decline.
While overall manufacturing production expanded in April, selling prices slipped lower (down 8.7 points to 46.0).
"The continued weakness of the Australian PMI reflects consumer caution and the substantial erosion in the competitiveness of the industry related to the volatile and rising dollar, the Australian Industry Group Chief Executive, Heather Ridout, said.
“The uncertainty of how this will evolve is the essence of the pressures on the industry.
"Next week's Federal Budget needs to address this critical uncertainty in what is a key and big employing sector of the national economy.
“There is clearly a requirement for more proactive policies to build productivity in manufacturing through investments in workforce development, energy efficiency, the exploration of export opportunities and R&D," Ms Ridout said.
PwC Global Head of Industrial Manufacturing, Graeme Billings, said: "Manufacturers are facing a most testing environment due to the strength of the exchange rate and consumer caution.
“April did see some positive movements in some manufacturing sub-sectors such as building materials, basic metals, food and beverages and machinery and equipment. These signs are, however, very tentative and are overshadowed by the flatness or contraction across the remaining sub-sectors.
"Against this background, it is imperative for businesses to maintain the search for new opportunities, new markets, new product lines and new sources of industrial efficiency," Mr Billings said.