For 11 months now the Australian Industry Group Performance
of Manufacturing Index (PMI) indicated shrinkage for the industry.
The seasonally-adjusted national composite index showed a
result of 40.2 for January, down from December’s 44.3. A result below 50
indicates a contraction.
Every sub-sector experienced a decline except for wood and
paper products, though the contraction for every sector except petroleum, coal,
chemical and rubber eased.
"The well-entrenched pressures that have been
confronting the manufacturing sector for several years are being compounded by
a slowing in the broader economy,” said the Ai Group CEO Innes Willox in a
statement.
“The extent of the contraction is reinforced by the ongoing
contractions in January of the production, employment, new orders and exports
sub-indicies of the Australian PMI®”
Respondents for the PMI survey listed soft demand and the
high dollar as issues. The survey also noted that input costs and wages were up
for January, while selling prices were down.
Bloomberg reports that the result is a 3 1/2 –year low for
the industry, with the high dollar trumping any benefit that might have been
experienced from lower interest rates. The Reserve bank cut rates when it met
in December, but is not expected to do so again when it convenes on February 5,
according to Dow Jones Newswires.
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