Drastic drop in manufacturing activity in June


Activity across Australia’s manufacturing sector contracted sharply in June with the Australian Industry Group (Ai Group) Performance of Manufacturing Index for June dropping 8.1 points to 44.2, the lowest reading since July 2013 (seasonally adjusted).

Image credit: http://www.aigroup.com.au/
Image credit: http://www.aigroup.com.au/

Ai Group reported that six of the survey’s seven subindices contracted during the month with new orders, production, employment, sales and supplier deliveries falling by 10.6, 9.3, 5.9, 6.9 and 9.7 points respectively.

Manufacturing exports, at 50.3, down 8.1 points on May, was the only subindex to record growth during the month. Manufacturing stock levels were broadly stable (up 0.1 points to 49.6), while the sales sub-index contracted for a 13th consecutive month, and at a faster pace (down 6.9 points to 41.1).

Four of the eight manufacturing sub-sectors expanded in June: food, beverages & tobacco (up 0.7 points to 60.5); wood & paper products (up 4.5 points to 63.8); textiles, clothing & furniture (up 5.8 points to 52.5); and printing & recorded media.

“While the lower dollar continues to support exports, local demand remains generally weak, apart from a few bright spots in food and beverages and housing-related manufactures. In particular, the progressive closure of local automotive assembly is now having a greater impact on downstream demand. Further declines in mining and other business investment in machinery and equipment, and a still subdued economic outlook, are weighing more heavily on the manufacturing sector than any positive effects of the Federal Budget and recent interest rate cuts,” said Ai Group Chief Executive, Innes Willox.

Ai Group reported a surge of activity in May, when the index lifted 4.3 points to 52.3, as the lower Australian dollar supported a flurry of exports.

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