Manufacturing recovery slows in March: survey


The pace of recovery in the manufacturing sector eased in March with declines in production, employment and inventories

Manufacturing recovery slows in March: survey
Manufacturing recovery slows in March: survey

April 1, 2010

The pace of recovery in the manufacturing sector eased in March with declines in production, employment and inventories restricting growth.

The latest seasonally adjusted Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI) fell 3.6 points to 50.2 in the month, just above the 50 point level separating expansion from contraction.

AI Group
Chief Executive Heather Ridout says despite strong growth in the December quarter, manufacturing still "has ground to make up".

"The lacklustre March Australian PMI reading suggests the recovery in manufacturing is battling strong headwinds in the form of weak demand, a strong dollar and rising interest rates. After taking into account higher margins above the cash rate, many businesses already face rates that are above 'normal' levels," Ridout says.

She adds the result underlines the importance of the upcoming Federal Budget for manufacturing, which faces particular challenges from "the emerging two speed economy".

"It highlights the need for sustained Budget funding to help build competitiveness and capability to deal with the complex business environment in prospect, such as through support for exports through the EMDG Scheme, support for small business through the Enterprise Connect program, support for business investment in innovation and R&D and support for skills investment by industry at a time when margins are under pressure."

KEY FINDINGS

Key findings from the Australian PMI reveal the new-orders sub-index fell 5.1 points to 50.9 in March.

The employment sub-index was also down, dropping to 47.1, while wages growth rose slightly.

Consumer-related sector activity, including in food & beverages and clothing & footwear, was lower again over the month.

Growth was strongest in the textiles and wood, wood products & furniture sectors, while there was a softening in construction materials demand.

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