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Aus manufacturing contracts for first time in over a year

The Australian Industry Group Performance of Manufacturing Index ended 13 straight months of expansion in August, with the sector and overall economy described as patchy.

The PMI declined sharply from 56.4 in July to 46.9, with the sharpest fall seen in the food, beverages and tobacco sub-sector (slipping 4.0 points to 48.7). The Ai Group described the sub-sector’s fall as a major factor in the overall sub-50 result.

Any result under 50 indicates contraction.

“Conditions also deteriorated for manufacturers of non-metallic mineral products and the recent growth spurt in the metals products sub-sector came to an end,” said Ai Group CEO Innes Willox in a statement.

“For manufacturing as a whole, despite gains in a number of other sub-sectors, production, sales, employment and stocks all fell in August.”

Encouragingly, new orders were in growth territory, though this was the only of seven sub-indices above 50.

“The continuing patchiness both of the manufacturing sector and the broader economy underscores the importance of lifting confidence and improving policy settings in areas such as workplace relations, taxation and budgetary policy,” said Willox.

Click here to read the PMI results.

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