Manufacturing activity highest since 07, stocks up


Manufacturing activity hits highest levels since 2007; deliveries up and stock rundowns cease

October 2, 2009

Domestic manufacturing activity is at the highest levels since December 2007, and everyone in the supply chain is benefiting from the recovery.

Production volumes were up in September, inventories also rose, while transporters saw slightly increased delivery demand according to the Performance of Manufacturing Index figures.

The small rise in inventories follows 11 months of stock rundowns.

The September result of 52.0 was up slightly on the August figures, with activity expanding for the second consecutive month.

Seven of the 12 sub-sectors recorded gains in September, while employment also stabilised after 20 months of declines.

But AiGroup Chief Executive Heather Ridout is warning against complacency, highlighting that new orders growth eased back significantly in September following a solid lift in August.

"The September result underlines the importance of the monetary and fiscal stimulus to industry. Winding back either too early would pose real risks to the recovery," she says.

"The very steep rise in the exchange rate is equivalent in key respects to a monetary tightening. This further strengthens the case to leave interest rates at current levels."

Graeme Billings, PricewaterhouseCoopers’ Global Leader of Industrial Manufacturing, says the figures show demand is increasing for manufactured goods but margins remain tight.

"While average selling prices increased slightly in September, pressures on margins will remain strong, as cost and wages growth have also strengthened," he says.

"Ongoing focus on cash flow management will remain critical, particularly until the improvement in manufacturing conditions becomes sustained."

You can also follow our updates by joining our LinkedIn group or liking us on Facebook