Manufacturing activity slows in June


The pace of growth in the manufacturing sector eased in June due to a drop in production and new orders

Manufacturing activity slows in June
Manufacturing activity slows in June

July 1, 2010

Slower growth in production, new orders, employment and supplier deliveries saw the pace of expansion in the manufacturing sector ease in June.

The seasonally adjusted Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI) dropped 3.4 points to 52.9 in June, still above the 50 point level indicating an expansion in activity.

Eight manufacturing sub-sectors grew in June, up from seven the previous month.

Consumer related sectors were among the best performers, including food & beverages, wood, wood products & furniture and textiles.

On the downside, clothing & footwear declined for the sixth consecutive month.

KEY RESULTS

Key results show slower growth in production (53.5), new orders (51.2), employment (53.0) and supplier deliveries (54.4).

Inventories grew modestly in the month, up 1.7 points to 53.8

Construction materials grew solidly due to the lagged effects of stronger housing construction, while paper, printing & publishing declined sharply over the month.

The new orders sub-index fell by 3.4 points to 51.2, though it remained above the 50 point level separating expansion from contraction.

The seasonally adjusted employment sub-index fell by 2.6 points in June to 53.0, but reflecting the lagged impact of solid output growth in recent months, employment rose moderately.

Average wages growth rose strongly in June, with the sub-index up 6.9 points to 64.9.

‘CONSIDERABLE' WAY TO GO: Ai GROUP

Ai Group Chief Executive Heather Ridout says the easing of manufacturing growth confirms the protracted nature of the current recovery.

"While the performance in recent months points to a positive June quarter both for the sector and the broader economy, there remains a considerable way to go before manufacturing returns to the levels of activity of mid-2008," Ridout says.

"Of particular concern is that the new orders sub-index was treading water in June. New orders are a pointer to future directions for output and employment. The slower growth in the production and employment subindices during June reinforces this concern," she says.

"The sector remains reliant on fiscal stimulus measures and, notwithstanding the better performance of some of the consumer-related sub-sectors, is vulnerable to further interest rate increases."



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