Manufacturing activity still subdued

By: Troy Bilsborough


Manufacturing activity has remained subdued for the third month in a row, a recent survey has found. The Australian Industry Group

Manufacturing activity has remained subdued for the third month in a row, a recent survey has found.

The Australian Industry Group - PricewaterhouseCoopers Australian Performance of Manufacturing Index fell 0.2 points to 51.2 in March following a 2.2 rise in February.

"Manufacturing activity is clearly being impacted by interest rate hikes, while uncertainty around the global economic outlook is a further drag," Ai Group Chief Executive Heather Ridout says.

"The lagged effect of higher official and commercial interest rates and the sustained high level of the exchange rate will continue to be felt over the next few quarters."

Ridout adds "Further action on monetary policy appears increasingly unnecessary".

Production was essentially stable, while employment eased for the third consecutive month

PricewaterhouseCoopers Global Leader of Industrial Manufacturing Graeme Billings says the results illustrate the ongoing competitive pressures facing manufacturers into 2008.

"Cost pressures in terms of both inputs and labour costs and the sustained competitive pressures in local and overseas markets continue to weigh heavily on firms and their margins," he says.

"Productivity improvements and cost management remains the key to company profitability in the near-term."

Import competition, cost of and lack of skilled labour, the rising cost of raw materials, and the high $A and Chinese competition all had negative impacts.

Manufacturing activity grew in all states except South Australia.

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