Study shows pace of manufacturing activity falls to 17-year low

The Australian Industry Group/PricewaterhouseCoopers Performance of Manufacturing Index fell by 3.1 index points in March to 30.1 points, seasonally adjusted.

It is the lowest reading in the series since it began in 1992, and April marked the 11th consecutive month that the index was below the 50 point-level — indicating a contraction in manufacturing activity.

AiGroup chief executive Heather Ridout said on Friday the downturn in the global economy kept weighing on local manufacturers.

"Weak demand in both domestic and global markets contributed to the ongoing contraction of the sector," Ridout said in a statement.

"However, the inventory index is at record lows, which should suggest that production levels will have to lift soon to replenish stocks."

Manufacturing activity fell again in all states during April, with Western Australia and South Australia posting the largest declines, while new orders fell for the 12th month in a row. Commsec economist Savanth Sebastian said April's result displayed the impact of the global recession on the confidence of firms and consumers alike.

"The latest reading is a good barometer of the pessimistic outlook noted by consumers and businesses over the last few months," Sebastian said.

Firms were reducing their levels of stocks for the seventh straight month in April and at the fastest pace in the 17 years of the survey, the report said. Weak local and overseas orders were cited by firms as the main driver of a depressed climate for manufacturing.

Source: AAP NewsWire