Manufacturing malaise continues

AUSTRALIA’S manufacturing sector’s malaise continues as the sector contracted for the 23rd consecutive month in May.
The Australian Industry Group’s Performance of Manufacturing Index shows the sector shrank in May, following a sharp contraction recorded in April.
Manufacturers across the board cited ongoing weakness in local demand from households and businesses (and especially housing construction weakness), fierce import competition, the federal budget and the upcoming federal election as among the factors having negative impacts on confidence and activity, the published report said today.
Ai Group Chief Executive Innes Willox, said that while the slump had eased slightly in May, the fundamentals remained.
“The Australian PMI recovered somewhat in May from the plunge in April, but the overall landscape across manufacturing is still one of contraction,” he said.
“The welcome drop in the Australian dollar in recent weeks will provide breathing space for many exporters and will help lift confidence.
“Manufacturers are telling us that despite the latest cut to official interest rates, weak demand from businesses and consumers remains all too evident.
“This caution is to a degree being influenced by the prelude to the federal election which is generally a period when consumers and business keep their hands in the pockets.”
None of the sub-sectors covered by the index recorded an expansion in May, with metal products producers and food, beverage and tobacco product producers among the weakest.
The PMI rose 7.1 points to an index level of 43.8 in May.
A reading level of below 50 indicates the sector contracted in the month and the lower the reading, the greater the rate of contraction.