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Local manufacturing orders 'dry up' in November: Australian PMI

04 December, 2013

After a promising two months of mild expansion in activity, the Australian manufacturing sector slipped back in November according to the Australian Industry Group's Australian Performance of Manufacturing Index (Australian PMI).

The Australian PMI fell by 5.4 points in November to 47.7 points (seasonally adjusted). 50 points marks the separation between expansion and contraction.

Contraction was evident in the sub-indexes for production, new orders and supplier deliveries, which all fell below 50 points after a promising lift last month. The employment sub-index moved up 1.5 points to 50.1 points, indicating that manufacturing employment numbers were stable in November. This was the highest reading in this sub-index since October 2011.

Growth in food and beverages manufacturing slowed while expansion rates improved in some of the smaller sub-sectors such as wood and paper products and printing and recorded media. The larger sub-sectors of non-metallic mineral products (mainly building materials), metal products and machinery and equipment continued to show contraction in November.

Australian Industry Group chief executive, Innes Willox said: "Survey respondents indicated that the mild lift in local new orders immediately after the September federal election is already drying up, as mining, government, maintenance and R&D spending slows.

"While the current downward pressures on the dollar are positive for the industry, the currency remains stubbornly high. The dollar and fierce import competition continue to take their toll, as many businesses struggle to maintain market share in an environment of generally weak demand for local goods and equipment.

"Export markets also remain tough under the influence of the relatively high dollar with the exports sub-index dropping under 30 points again this month."

The Australian PMI key findings for November were:

  • The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) fell by 5.4 points in November, to 47.7 points
  • The production sub-index in the Australian PMI points fell by 8.4 points to 46.2 points in November
  • The new orders sub-index fell 6.9 points to 48.8 points, taking this sub-index back under 50 points after two consecutive months of mild expansion
  • The employment sub-index moved up 1.5 points to 50.1 points, indicating employment numbers (usually a lagging indicator of activity) were stable in November
  • Stocks contracted at a faster rate, with this sub-index dropping 5.5 points to 43.8 points
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TRC | Wednesday, December 4, 2013, 10:33 AM
It is really time the governments of Australia started to throw their weight behind local manufacturing and started a policy of purchasing Australian Made unless the product they require is not made in Australia. This type of support will allow the manufacturing sector to rebound and grow which will reap benefits in employment and taxes for the government. I can not understand why they are not doing this. Look after Australia first and worry about the rest of the world later. I am fedup with our governments worrying about everything that is happening outside of Australia while turning a blind eye to Australia and her people as they crash and burn.
Peter Cohen | Wednesday, December 4, 2013, 12:19 PM
Pure free market does not work. Our manufacturers are losing to cheap exports many of which won't remain cheap forever. Also or dollar haas been high. Some protections is needed. It is ridiculous that our super market shelves are filled with cheap European cheeses when good Australian products are available, how can a German made cheese be cheaper than an equivalent Australian product when German labour costs are up with ours? They are clearly dumping. And our many high tech manufacturers need help. Exports are difficult for small start up companies why don't we have subsidised export organisations, other companies have them? Without government help our manufacturers can barely survive let alone prosper.And where is the Buy Australian community spirit? Why import cheap beers when they are using an Australian developed process for making them. Why don't restaurants stock the better Australian beers rather than these mass produced imports.