ACCI survey shows manufacturing is improving


The December quarter 2013 ACCI (Australian Chamber of Commerce and Industry)–Westpac Survey showed signs of improvement in the manufacturing sector and a slow increase of general business expectations for the next few months, across most industries, apart from the automotive industry.

Image credit: Free Digital Photos user adamr
Image credit: Free Digital Photos user adamr

Published shortly after Holden’s announcement that it will be closing its Australian-based plants by 2017, the ACCI’s survey put out the strongest numbers in the last three years in most aspects, reports the Sydney Morning Herald.

As for the surveys’ forward projections, they remained mixed, although somewhat more favourable than three months ago.

According to a media release by ACCI, the December quarter report reveals that net outcomes for New Orders and Output have strengthened over the last few months, rising from -4% to 32% and (0% to 20% respectively).

The Capacity Utilisation Indicator firmed, with 73% of the surveyed manufacturers working at or above their production capacity. The remaining one quarter reported working below their capacity. Projections for capital expenditures on plant and equipment for the next year has registered a tender drop of 3%, while spending intentions for buildings and structures have remained at an embarrassingly low level of -7%.

The net employing outcome is set at (-1%), firmer than three months ago, with a similar net projection (-2%). The net Overtime Worked indicator surpassed its projections and reached the 30% mark, however, probably due to reflecting seasonal factors, the net forward prediction is down to -4%.

Profitability expectations have continued to gradually firm (14%) as a result of the easing wage costs, although manufacturers still find it difficult to pass on cost increases through higher selling prices. Despite firming marginally, the net outcome for average selling prices remain soft (5%).

What is encouraging though, is that the December quarter average unit costs indicator is lower than expected at (9%),with further predictions for cost increases.

“The continuing improvement in general business expectations for the next six months is welcome news, particularly because it has been partly matched by a simultaneous firming of several key activity indicators. Actual demand, production, employment, capacity utilisation and overtime worked outcomes have improved. However, while positive, some forward indicators are softer than September quarter outcomes,” said Mr Peter Anderson, Chief Executive, Australian Chamber of Commerce and Industry.

“Based on these results, an appetite exists within the private sector to take steps to increase activity in 2014, but the external environment needs to trigger that firming sentiment. That’s why passing the carbon tax repeal before Christmas would not just ease energy cost rises and add to industrial competitiveness but also lock in the firming confidence this survey reveals.”

ACCI chief executive Peter Anderson said manufacturing is showing a modest firming off a low base. “But nonetheless there are some encouraging signs in the manufacturing industry outside of the motor vehicle industry,” he told reporters in Canberra on Thursday.

“Overall the picture for Australia’s manufacturing is not one of sack cloth and ashes.”