Manufacturing on the rise in January

Renewed demand in housing and resources sectors boosted manufacturing activity last month

February 1, 2010

A renewed demand in the housing and resources sectors boosted manufacturing activity last month, particularly for companies involved in transport equipment.

The Performance of Manufacturing Index (PMI), prepared by the Australian Industry (Ai) Group and PricewaterhouseCoopers, rose by 2.5 points to 51.

However Ai Group Chief Executive Heather Ridout says there are still signs of the uncertainty that has plagued the industry since the start of the economic crisis.

"While manufacturing made a relatively encouraging start to the year, the performance of key components remained patchy, with a rise in new orders broadly offset by a heavy run down in stocks and a decline in employment," Ridout says.

"With output in the sector having fallen by 7.8% in the year to the September quarter 2009, and with around 80,000 jobs lost from the sector in 2009, a sustained upswing in manufacturing activity is needed to fill the large chunk taken out of the sector by the global economic downturn".

Ridout’s concerns were echoed by PricewaterhouseCoopers’ Graeme Billing, who says manufacturers need to up their game to see an increase in production.

"In recent months, the rate of capacity utilisation in the manufacturing sector has lifted to be more or less in line with the long-run average, and it is therefore vital that manufacturers seek new ways in which to boost their levels of productivity," he says.

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