Australian manufacturing contracts in December


The manufacturing sector in Australia fell into contraction in December, the latest survey from the Australian Industry Group revealed on Monday, with a PMI score of 46.9, which is back below the 50 level – the threshold between contraction and expansion. 

Image: SXC user wmagni
Image: SXC user wmagni

“Only two of the seven activity sub-indexes – those for employment (up 4.7 points to 52.5) and exports (up 2.9 points to 51.0) – were above 50 points this month. The new orders sub-index fell sharply (down 10.6 points to 43.7) following two months of mild expansion, reflecting slower growth or a decline in new orders across the manufacturing sub-sectors. Manufacturing production also contracted for a second month (down 1.4 points to 46.0). Reflecting the weak trading conditions, supplier deliveries (down 3.5 points 48.5) and stocks (almost unchanged at 45.4) also contracted in December,” Australia’s peak industry association revealed in a media release.

“We would have hoped to have seen a stronger Australian PMI® in the lead-up to Christmas, but the finding is consistent with other publicly released data. Respondents to the Australian PMI® welcomed the further depreciation in the Australian dollar, but noted that the level of the dollar continues to encourage strong import competition. Business sentiment and appetite for investment remain weak. The closure of Australian automotive assembly facilities now under way, plus the rapid decline in mining investment activity, are also weighing heavily on demand for locally made machinery inputs and components,” said Ai Group Chief Executive, Innes Willox.

Of the eight manufacturing sub-indexes, four expanded: food, beverages and tobacco was up 1.3 points to 60.4; wood and paper products were down 10.5 points to 51.1; clothing and furniture was up 4.2 points to 58.6; non-metallic mineral products was up 12.4 points to 62.6.

Four contracted: machinery and equipment was down 1.7 points to 42.9; petroleum, coal, chemicals and rubber was up 3.0 points to 42.9; printing and recorded media was down 2.6 points to 40.1; metal products was down 2.3 points to 40.9.