Innes Willox … mounting costs

Australian manufacturing activity contracted for the ninth straight month in November due mainly to an ongoing decline in new orders and production.

The latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) dropped 1.6 points to 43.6 in November.

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

Food and beverages was the only sub-sector to expand in November. 

Textiles, clothing & footwear, chemical, petroleum and coal products, construction materials, basic metals and fabricated metals all recorded significant declines in activity.

"In each of the past eight months the production, employment, exports and new orders sub-indices have all declined, said Australian Industry Group Chief Executive, Innes Willox. “Over the same period wages and non-wage costs have risen while there has been downward pressure on selling prices.”

Mr Willox said the pressures on industry look set to continue.

"The key concerns for manufacturers remain the high dollar, rising energy costs and weak demand in export and local markets, he said. “These factors are exacerbated by the ongoing slump in the residential and commercial construction sectors and have not been offset by the reduction in interest rates to date. 

“Mounting costs are putting manufacturing businesses under relentless pressure, adding to the case for further interest rate cuts."