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Australian manufacturing industry contraction: highlights from the April 2011 Australian PMI

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Australian manufacturing industry contraction

According to the Australian Industry Group (Ai Group) and PricewaterhouseCoopers (PwC), the manufacturing industry in Australia is on a contraction trend, with the Australian Performance Manufacturing Index (PMI) below 50 points in April 2011 (which is the level separating expansion from contraction).

Some of the highlights of the Australian PMI survey are the following (Ai Group & PwC, 2011):

  • The manufacturing sector contracted in Victoria, Queensland and Western Australia, but expanded in other states;
  • Margins narrowed, as selling prices decreased, while wages and input costs increased;
  • The decline was more significant in the transport equipment and textiles, due to the strengthening of the Australian dollar, soft national demand and import competition;
  • However, manufacturing output expanded 2.4 point (especially led by the clothing & footwear, basic metals, and machinery & equipment sub-sectors);
  • Also, the capacity utilization rose to 74.4% (especially in the miscellaneous manufactures and food & beverages sub-sectors);
  • Overall, the areas that expanded from the previous month were Production, Input prices and Average wages (these two affecting production costs), as well as Capacity utilization, while the others contracted (Employment, New orders, Inventories, Export and Selling prices).

Note: The Australian PMI is a seasonally adjusted national composite index based on the diffusion indices for Production, New orders, Deliveries, Inventories and Employment with varying weights. For the complete results of the Australian PMI monthly suveys starting with 2005, click here.

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