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Australian PMI: Manufacturing contracts slightly in June

02 July, 2014

The latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) remained in contractionary territory in June, down slightly by 0.3 points to 48.9 points to remain below the 50 point expansion level (seasonally adjusted).

Manufacturing production (49.4) and sales (46.7) both moved into the red in June while the new orders sub-index - although still expanding at 51.2 - was 3.9 points weaker. Many respondents to this month's survey reported softening sales of locally made products due to the higher level of the Australian dollar.
Australian Industry Group Chief Executive, Innes Willox, said: "Activity in the manufacturing sector slipped in June with production and sales both lower and employment continuing to decline. The Australian PMI® has now indicated sector-wide contraction for eight consecutive months.
Positive signs in food and beverage sector
"Respondents from import-competing businesses in particular noted the adverse impacts of the renewed strength of the Australian dollar. Nevertheless, there were some positive signs: exports by the large food and beverages sub-sector expanded in June which lifted total manufactured exports while new orders remained in positive territory.
"It is clear that there are ongoing pressures facing manufacturing and there is a continuing need to improve cost-competitiveness and productivity across the sector. In this regard, removing the carbon tax will help manufacturers especially as competitive pressures forced so many to absorb the cost of the tax," Willox said.
Key findings for June
The latest Australian Industry Group Australian Performance of Manufacturing Index was slightly weaker in June at 48.9 - a drop of just 0.3 points on the previous month (readings below 50 indicate contraction.
  • Only the very large food and beverages (52.5 points) and the smaller wood and paper products (54.2 points) sub-sectors expanded in June
  • The large metal products, machinery and equipment, and petroleum, coal, chemicals and rubber products sub-sectors all contracted this month (i.e. below 50 points)
  • Manufacturing employment contracted at a slower pace in June - 45.5
  • While the supplier deliveries sub-index indicated expansion this month (50.8), manufacturers' stock levels continued to contract with the sub-index recording a level of 44.8
  • The selling price sub-index dropped further to 44.8

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