Australian Manufacturing PMI Remains in Contraction

2 Dec 11

The Australian Industry Group/PriceWaterhouseCoopers Australian Performance of Manufacturing Index (PMI) rose just 0.4 points in November to 47.8 keeping it below the 50 points level, which means it is still contracting rather than expanding.

Of note also is that the Chinese PMI has fallen for the first time since 2009 to be in contraction at a level of 49. Whilst a larger downturn in Chinese manufacturing output has been seemingly ruled out by economic commentators, it is a reflection of lower demand for Chinese exports, particularly from the troubled Eurozone.

Local Chinese demand has also been in decline with the fiscal and monetary policies adopted by the Chinese government to take the heat out of the economy. Reports however suggest that the slowdown is larger than anticipated and the Chinese government is moving quickly to ease restrictions on lending, that had previously been in place, to provide some domestic stimulus to avoid a hard landing.

The Australian PMI comes as no surprise as our manufacturers continue to struggle against the high dollar, competition from Asia, lack of local input into domestic projects and a slow-down in the construction industry.

Importantly, and what many would not recognise given talk of Australia's two-speed economy, the Australian manufacturing sector whilst in contraction is suffering from a serious skilled labour shortage which is another factor restricting its expansion.

To this day Manufacturing represents a good career choice and is still one of the only skilled professions where participants can be earning a good income with less educational requiresment than other professions. Read more on this by clicking here.

The full November PMI report can be found by clicking here.