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Signs of growth: Australian manufacturing records positive PMI

04 October, 2013

In a positive result not seen since July 2011, the September 2013 Australian Performance of Manufacturing Index (PMI) has recorded an overall score of 51.7 points – above the mark of 50 separating expansion and contraction.

The Australian Industry Group's seasonally-adjusted index, released every month, rose from 46.4 in August for a swing of 5.3 points. At the time, this was reported as the 26th consecutive month of contraction, representing the longest such period in the PMI's 21-year history.

On the back of the recent federal election victory by the Coalition and the declining value of the Australian dollar, Australian manufacturers appear optimistic of future industry growth.

Respondents of the latest survey cited factors such as lower interest rates, improved sentiment and actual orders from Australian-based customers as major reasons for the expansion in manufacturing activity.

According to the key findings of the index expansion was strongest in the food, beverages and tobacco sub-sector, which recorded its best result since March 2012 with a score of 60.1, while mild expansion was also evident in some of the smaller sub-sectors including petroleum, coal, chemicals and rubber products (54.1, highest since April 2011).

"The index for the large metal products sub-sector improved to 32.5 points in September, but it remains close to the historically low levels seen in recent months," the Ai Group report stated.

The large machinery and equipment sub-sector declined to 39.7 points in September. This sub-sector has been indicating contraction since January 2012.

"Businesses report there is still a strong preference among many customers to repair or modify existing machinery rather than to replace it, which is dampening demand for new machinery but providing a subtle boost to those who specialise in supplying parts and maintenance services," according to the index summary.

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ddande | Wednesday, October 9, 2013, 10:45 AM
This should not be such a surprise to most "On the back of the recent federal election victory " basically says it all. With the uncertainty around Carbon Tax ,Mining Tax,and the dreaded Greens pushing to increase % of these. Along with escalating Union activity,number of businesses closing and lack of ideas/stimulus forthcoming from Government as they gleefully perfomed replays of Julius Ceasar on each other, there could have been no other result other than if a another Government was installed.
Hedley | Wednesday, October 9, 2013, 1:09 PM
What we are missing here is the detail. The jobs growth claimed as a success by the previous government turns out to be just more public servants when the real detail comes to us. So no REAL growth. Now our industry body spruiks that things are getting better because ,seasonally adjusted, we show 1.7 percentage points above zero growth. What? Where? Long term or short term? But not to worry, McFarlane is chastising the heads of Ford and Toyota today, on our behalf, that their days are numbered unless they substantially grow their exports. The last time that tactic was used came from a Senator Button. Oh dear. What happens after the car manufacturing/assembly lines leave us? Not to worry, the car companies will head off to a third world country that has less overhead costs until that country also get the desease of not wanting to work. That's when they pump up the wages and conditions, add on red tape, reduce working hrs, add on work care and director liabilities etc. Then the car companies might come back to us because by then we will do anything to encourage them here so that our kids can be involved in skills that our third world economy will, by then, have mainly lost. Sorry to sound cynical; but I am old enough to have seen all of this before as our governments destroyed our skilled industries through ignorance of how we fit into our country's way of life. Understanding this, I, like a few others I network with, are preparing for better times as our skills move up the demand cycle where they become more valuable and charge rates more favourable. But that wont help the youth. Hey McFarlane, have your advisors netted off the sum of the unemployed youth costs against the car company support savings? I just hope the politicians are bluffing the car companies and not acting in ignorance as they have done in the past.
Lou Furbadamo | Tuesday, October 15, 2013, 10:21 AM
Premature, short term, machination is meaningless, without credible long term strategy and fundamental competitive restructure. Our “level playing field” required for competitive success, won’t eventuate, unless we too seemingly drop to third world status, because of high wage relativities, crippling overheads and dooming, bi-partisan, entrenched current multi tiered, sapping Gov. systems & mindless fascination with countless, dysfunctional dodo pollies. Cynically, many still remember years of disastrous Button Plan, repeated Gov. industry betrayals, deception, wasted billions, factory closures, failures, jobs, skills and technology losses. Etc. So objectively, critical local Auto manufacturing, has already abysmally shrivelled & failed! Depressingly, Mitsi has gone, Ford is going and the remnant two are quasi blackmail threatening to go! No doubt, cunning multi national masters, finalised long term exit strategies years ago. Regardless, thanks to ongoing pitiful Gov. disincentives, destructive free trade, global outsourcing & sell outs. Most “original manufacturing” has already gone cheaper offshore and left us scaled back, emasculated assembly shells, outrageous suckering demands, long term non-commitment and ongoing, clueless Gov. jerquer hype. It’s negotiation antics clear, that the previous ill-conceived, Lefty Auto Industry handouts & grants “strategy”, only stalls “inevitable” factory closures & exits. From experience, these “wood duck, faith and a prayer”, free-bee payments, do little more than insanely speed up amortisation of existing local equipment & tooling to help pay & justify quicker final closures and offshore relocation to Asia! Which is the last thing we should encourage? But rationally, we can’t afford continued crippling industry contraction, destruction & “irreversible” loss of local capability, technical innovation, design, expertise and crucial jobs. Our daft politicians haven’t realised that production efficiency requires sustainable volumes (of vehicles) going down the production lines and naively believe, that the only way of retaining manufacture at the likes of GMH, Toyota & “lost” Ford is to effectively bribe them to stay! When clearly, the proactive furbo answer, is to frighten the profits daylights out of them and severely punish muted relocation to cheaper dives. By reintroducing a masterly whip balance of spiteful import tariff protection and or preferably subsidised, “Buy Australia Incentives”. Ie; Directly reward the loyal public for supporting Aussie Manufacture and then high local content Auto companies. Thereby, removing current recklessly ineffective handout emphasis from Auto companies & forcing them to improve, become design relevant, efficient, viably market competitive & earn profits! The strategy being to boost local content, market share, production line volume efficiencies & productivity. Rather than continue wasting billions on stale, usurping Auto Companies. Previously I suggested a simple 30% tariff on imports and importantly, a Gov. alluring rebate of initially $10,000 per new, minimum 80% Aussie content made, vehicle purchase. Split $7,000 to BUYER & $3,000 to Auto companies to competitively entrench & expand them HERE! Subsidy and tariff rates would be wisely adjusted to maintain minimum 75% Australian Market Share and thrust locally GMH &Toyota to top sellers again! Meerkat Simples! But it’s surely still too complex for our Abbot Blessed, Free weddings and marathons Budgie Coalition? Signs of “New, Flowing, Economic Confidence”? Sure! But I did intimate last year that the fishy, basket case “Yankee Piscal Piff” (fiscal cliff), would return to knock stuffing out of our delusional world economy! Regardless of Galloping Clive and Pious, Asian Grovel Apologetic Tony! Cheers, Doubting Furbo!