A survey conducted by the Australian Chamber of Commerce and Industry-Westpac shows that Australia’s manufacturing sector has slumped to its weakest level in nearly three years, despite a steady run of interest rate cuts, according to a report from News.com.au.The survey of industrial trends showed that manufacturing’s composite index dropped from 50.4 points in the last three months to 46 points in the March quarter.
The figure which fell below 50 points indicates that the manufacturing sector is in contraction, or in a period of economic decline. It also represents the weakest result since June 2009.
“The Australian manufacturing sector remains under considerable pressure despite the substantial rate cuts delivered to date,” said Westpac economist Elliot Clarke, being quoted by News.com.au in the report released today.
Clarke says the overall manufacturing sector remains weak despite the interest cuts which have been implemented since November 2011 and has helped those who are in the lines of residential construction. Investment intentions in the manufacturing sector also remained weak.
“As the mining investment boom draws to a close, further monetary accommodation will likely prove necessary,” he said.
On the other hand, the survey’s respondents have a more positive outlook for the industry as the expected composite index rose to 53.2 points in the March quarter from 52.8 points
News of the decline in the composite index comes as the Government announced that it has taken another step further on the $1 billion Plan for Australian Jobs.
The Office of Industry and Innovation Minister Greg Combet has announced that the draft bill of the Australian Jobs Act has been released for public comment.
Part of the three core strategies of the $1 billion jobs plan is to help businesses win work at home.
“The legislation will require Australian Industry Participation (AIP) Plans for all projects with a capital expenditure of $500 million or more, to help Australian firms win work on large domestic projects and in global supply chains,” according to the news release.
“Australian firms have indicated that multinational developers undertaking large-scale projects in Australia often bring their established supply chains with them rather than giving work to local suppliers.
“This means Australian manufacturing, construction and service businesses are missing opportunities to grow and to create new jobs.
“The Government is determined to tackle this issue through the Australian Jobs Act to ensure Australian firms are fairly considered for all major projects.”