Survey shows Australian manufacturing activity declining

Australian manufacturing activity contracted at a slower pace in October but is still suffering from the effects of a strong Australian dollar and cheap imports, a survey shows.

The Australian Industry Group/PriceWaterhouseCoopers Australian Performance of Manufacturing Index (PMI) rose 5.1 points in October to 47.4. Readings below 50 indicate contraction in activity.

Declines in activity were largest in the clothing and footwear subsector and subsectors linked to the construction industry. Eight of the 12 manufacturing subsectors posted declines in activity in October. Australian Industry Group (Ai Group) Chief Executive Heather Ridout said she did not see manufacturing activity picking up any time soon.

"While it is encouraging that the pace of the decline in manufacturing activity eased in October, the sector remained in negative territory," she said in a statement accompanying the survey's release. "New orders remained soft suggesting that there are no real signs of a substantial, near-term pick up in the sector."

The new orders subindex rose 2.3 points in October, down to 46.9.

PriceWaterhouseCoopers (PWC) global head of industrial manufacturing Graeme Billings said the high Australian dollar and cheap imports made it tough for manufacturers.

"The easing in the contraction in manufacturing activity in October is encouraging but the sector continues to face challenging business conditions," Billings said. "Manufacturers need to continue to invest in productivity in order to lift competitiveness, a key determinant for the long-term outlook for the sector."

Meanwhile, the seasonally adjusted employment subindex increased 5.9 points in October to 51.6, marking the first monthly expansion after 11 consecutive months of declines. Increases in employment were recorded in the textiles; chemicals, petroleum and coal products; basic metals; transport equipment; machinery and equipment; and miscellaneous manufacturing subsectors, the report said.

Source: AAP NewsWire