Manufacturing contracted further in August, according to latest industry data.
The Australian Industry Group - PwC Australian Performance of Manufacturing Index (Australian PMI) was down slightly by 0.1 points to 43.3 to remain below the 50 points level separating expansion from contraction.
Manufacturers attributed the continuing weakness to the strong Australian dollar, sluggish domestic demand and increased competition from overseas.
"The continued weakness in the Australian PMI is further evidence of the extremely challenging business environment faced by our manufacturers,” said Australian Industry Group Chief Executive, Heather Ridout.
"The industry has a very positive future in Australia, she said. “However, we need decisive government action and a long-term forward-looking strategy for manufacturing that would contribute to creating the most competitive environment for the sector to flourish and survive through the resources boom. We also need immediate measures to support and improve incentives to invest and innovate. All of this action should be developed in consultation with industry."
PwC Australian Head of Industrial Products, Graeme Billings, said: "Australian manufacturers are clearly struggling against very significant headwinds. Innovation and productivity improvements are absolutely critical to ensuring manufacturers’ survival in the longer term. While initiatives to improve innovation needs to come from businesses themselves, all relevant stakeholders need to demonstrate appropriate support in these times of uncertainty," Mr Billings said.