Manufacturing growth modest in November

Manufacturing activity grows, but AI Group says business is not out of the woods yet

December 1, 2009

Manufacturing activity in Australia grew for the fourth consecutive month in November despite losing some of the previous month’s gains, according to figures released by the Australian Industry Group (AIG) yesterday.

Figures from the Australian Performance of Manufacturing Index (Australian PMI) show the seasonally adjusted index remained relatively steady, down by 0.5 points to 51.2 and above the 50 point level separating expansion from contraction.

AIG says despite a lift in new orders in recent months manufacturers are not convinced that conditions justify rebuilding their inventories.

However, a lift in production across manufacturing sectors contributed to the first rise in employment in almost two years.

Despite the rise, AIG Chief Executive Heather Ridout says there remains a long time to go until manufacturing is back where it was before the economic downturn, highlighted by a small drop from manufacturing results in October.

"The modest growth in activity in November underlines the tentative nature of the recovery," Ridout says.

"While new orders growth remained in positive territory, the stronger pace of improvement evident in October was short-lived.

"These results suggest there remains a considerable way to go before activity recovers from the setbacks over the past eighteen months.

The report also says that manufacturer’s profit margins remain under severe pressure despite the modest improvement in new orders seen in the last month and a lift in the growth of wages and input costs in November and falling selling prices will require a renewed focus on cost management and lifting productivity from manufactures.

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