Manufacturing output hits new lows in April

Manufacturing output trawls “uncharted lows”, with producers slashing inventories as demand crashes

Manufacturing output in Australia continues to "trawl uncharted lows", with producers slashing inventories at the fastest rate in history.

The Performance of Manufacturing Index, prepared by the Australian Industry Group and PricewaterhouseCoopers, fell by 3.1 points in April to a record low of 30.1 in April.

Volumes fell in all states, with the index remaining well below the 50-point mark that separates expansion from contraction.

AiGroup Chief Executive Heather Ridout says manufacturers are battling a continuing drop in demand for new goods.

"There was no let-up for manufacturers in April, with weakness and uncertainty continuing to characterise the sector," she says.

"Weak demand in both domestic and global markets contributed to the ongoing contraction of the sector. However, the inventory index is at record lows, which should suggest that production levels will have to lift soon to replenish stocks."

Ridout says producers are hopeful the infrastructure rollout and a left in housing starts will translate into new orders for local industry.

" However, a concerted effort to ensure that Australian-based companies are aware of the opportunities and have a fair and open access to them is important," she says.

PricewaterhouseCoopers Global Leader of Industrial Manufacturing, Graeme Billings, says manufacturers are having their profitability squeezed.

"Cutting back expenditure for marginal activities forms part of the strategy for underpinning profit margins until markets recover," he says.

"However, looking beyond the downturn remains important for long-term profitability. Retaining skilled workers, building supply chains to reduce costs and innovation across processes and products remain critically important."

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