The manufacturing industry slumped in July reflecting the tough trading conditions that continue to restrict growth in the sector.
The latest seasonally adjusted Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) fell 9.5 points to 43.4 in July to be below the 50 point level separating expansion from contraction.
The decline in activity was evident across manufacturing with only three of the twelve sub-sectors expanding in July.
The best performing sub-sector in the month was construction materials (61.5) while wood products and furniture was the weakest performing sub-sector (18.5). New orders fell sharply in July, down 14.4 points to 40.2.
"The difficulties facing manufacturing due to the high dollar and sluggish domestic demand intensified in July, said Australian Industry Group Chief Executive, Heather Ridout.
“The survey respondents indicated that adding to their broader concerns was the prospect of a carbon tax and this was clearly weighing on sentiment, Ms Ridout said. “Perversely, the only indicators of broad business conditions showing an increase were input costs and wages, both of which are negatives for the industry.
"We are currently in the midst of a boom and gloom economy and I defy anybody to say with any degree of certainty what the impact would be on the Australian economy if the dollar remains at current levels for a protracted period.
“The high dollar and high interest rates are impacting on the big employing sectors in Australia. This, together with the volatile and precarious state of international economic conditions and ongoing political uncertainty in Australia, are seriously undermining business confidence in large parts of the economy."