Australian manufacturing still contracting

The latest Australian Industry Group performance of manufacturing index (PMI), released on last Thursday, showed it rose marginally to 45.2 in October from 44.1 the previous month. However, readings below 50 indicate the industry is in contraction, a place in which it has been stuck since March.

The October subindex for new orders dropped to 43.9 in October from 44.3, while only two sectors expanded in the month - paper, printing and publishing (at 51.1), and transport equipment (at 52.5).

“Manufacturers continue to find the going very tough in the face of the strong dollar, weaker demand in export markets and flat conditions across the non-mining sectors of the domestic economy," said Ai Group Chief Executive Innes Willcox.

“Particularly in commercial and residential construction, which has strong linkages with domestic manufacturing. For quite some time, the sector has faced a squeeze on margins with prices for non-labour inputs and wages rising steadily while selling prices have been weak.”

He added that the contraction in Australia's manufacturing industry was comparable to Europe, despite the strength of the wider domestic economy.

Source: AAP