Manufacuring activity 'will get worse before it gets better'

Manufacturers urged to tighten supply chains as production slows further and freight volumes decline

Manufacturers are being urged to tighten up their supply chains as production slows further and freight volumes decline.

The outlook for the Australian manufacturing remains uncertain after the Performance of Manufacturing Index figures for March, released today, reveal the industry is still in decline.

In the figures released by the Australian Industry Group, numbers were slightly up by 1.7 points to 33.4 they are still well below the 50 point mark that separates expansion from contraction.

Of all the states and territories only Tasmania’s manufacturing activity rose slightly while the rest fall.

According to AI Group Chief Executive Heather Ridout the main reasoning for the continued deterioration could be put down to weak domestic and global demand for manufacturers, including China.

She says things will get worse before they get better.

"The Australian PMI suggests that economic conditions have not bottomed in the economy and that the outlook remains uncertain," she says.

"Business is hunkering down and hoping that conditions will improve in the second half of the year, whether they will remains to be seen."

Graeme Billings, Pricewaterhouse Coopers' Global Leader of Industrial Manufacturing, says it is important for companies to continue to focus on strategies designed to reduce long-term costs and boost productivity.

Such measures include the retention of key skills, optimisation of supply chains and product and process innovation, Billings says.

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