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Australian PMI: manufacturing remains in the red in May

02 June, 2014

Manufacturing made slight progress but remained in negative territory in May, according to the latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI). The seasonally adjusted index rose 4.4 points to 49.2, holding below the 50 point expansion level.

While respondents noted a dampening in confidence following the federal budget, there was a rise in manufacturing production and new orders in the month. These sub-indexes improved to 51.6 points and 55.1 points respectively.   Manufacturing employment contracted further in May, as did supplier deliveries, inventories and exports.  Four sub-sectors expanded and four contracted in the month.

Australian Industry Group Chief Executive, Innes Willox, asserted: "The manufacturing sector continues to be buffeted by weak household demand, a lack of business confidence and fierce competition in both domestic and export markets heightened by the renewed strength in the Australian dollar. 

"While there was an encouraging rebound in new orders after a particularly weak April, the public reaction to the federal budget appears to be weighing negatively on consumer sentiment and business confidence. The ongoing uncertainty over a number of budget measures is adding another layer of concern for local manufacturers," Willox said.

Key findings for May

  • The May Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) rose 4.4 points to 49.2 points (readings below 50 indicate a contraction in activity)
  • The new orders sub-index rose 13.3 points 55.1 points
  • The production sub-index rose 9.0 to 51.6 points
  • Manufacturing sales – a newly added sub-series this month – recorded 53.7 points in May
  • The employment sub-index fell to 40.8 points, its lowest reading in over a year (since April 2013)
  • Across the eight sub-sectors, four expanded, with the relatively small wood and paper products sub-sector recording the highest reading at 55.5 points.  The printing and recorded media sub-sector had the lowest sub-sector reading this month at 37.3 points Supplier deliveries sub-index was down, at 46.8 points
  • Stocks were also lower, with this sub-index at 46.1 points

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