Among the eight manufacturing sub-sectors, only the large food, beverages & tobacco (54.9 points) and the smaller wood & paper products (63.2 points) sub-sectors expanded in September. All of the activity sub-indexes, except supplier deliveries (up 4.1 points to 51.8), contracted during the month, with manufacturing exports experiencing the most significant deterioration, dropping 11.0 points to 42.2 – its lowest level in 18 months.
Production, sales and new orders
Australian Industry Group Chief Executive, Innes Willox, said: "Falls in production, sales and new orders underpinned the further slowing of manufacturing in September and have left the sector struggling short of the recovery that was tentatively suggested in July.
"While businesses welcomed the significant correction in the value of the Australian dollar in September, it will take some time before competitiveness in domestic and export markets improves.
"Respondents to the Australian PMI suggested that the winding down of Australian automotive assembly and the ongoing downturn in mining construction activity are dampening demand for locally-made products and components," Willox said.
Key findings for September
The latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) contracted for a second consecutive month in September, decreasing 0.8 points to 46.5 (readings above 50 indicate expansion).
The only sub-sectors to expand in September were food, beverages and tobacco (up 1.1 points to 54.9) and wood & paper products (down 3.1 points to 63.2).
The very large metal products (up 0.6 point to 48.0); machinery and equipment (down 0.3 points to 45.1); and petroleum, coal, chemicals and rubber products (down 3.2 points to 40.9) sub-sectors all continued to contract this month. The non-metallic mineral sub-sector, which mainly produces building materials, slipped a further 2.4 points to 44.7 despite a pick-up in local building activity – a reflection of the dollar's continued drag on import-competing local products.
All of the activity sub-indexes, except supplier deliveries (up 4.1 points to 51.8), contracted in September: new orders declined for a second month (down 3.0 points to 45.8); manufacturing employment moved up 1.2 points to 49.0; production dropped 3.8 points to 42.5; and sales dipped for a fourth consecutive month (down 3.2 points to 46.0).
Manufacturing exports deteriorated sharply in September (down 11.0 points to 42.2), with weakness most pronounced in the petroleum, coal, chemicals & rubber products; metal products; and machinery & equipment sub-sectors.
