Manufacturing slumps further in May

Innes Willox … ‘difficulties’

 

 

Australian manufacturing activity deteriorated further in May recording its lowest level in nine months, according to the latest industry data.

 

The Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) fell 1.5 points to 42.4 in May. Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.

 

Only three of the 12 sub-sectors expanded in May – paper, printing & publishing (53.5), machinery & equipment (52.7) and miscellaneous manufactures (51.4). 

 

New orders across manufacturing continued to drop – to 40.6 – its lowest level since July last year.  

 

Manufacturers continue to cite poor demand, the strong Australian dollar, import competition and the impending carbon tax as factors impeding growth.

 

Australian Industry Group Chief Executive, Innes Willox, said: "The difficulties facing manufacturers intensified in May. 

 

“The RBA’s reduction in the cash rate early in the month and the slip in the dollar over recent weeks should have positive impacts over the next few months.  

 

“Nevertheless, these factors were swamped in May by renewed household caution in the face of international and domestic uncertainties and weakness in residential and commercial construction.”

 

Mr Willox said the fundamental structural pressures facing non-mining trade exposed industries such as manufacturing continued to bite.  

 

“It is critical that manufacturing policy measures being developed by the Government and the Opposition take into account both immediate pressures and the longer-term adjustment processes that are underway," Mr Willox said.