September Performance of Manufacturing Index Down

3 Oct 11

Conditions in the manufacturing sector, not surprisingly, weakened in September with the PMI down 1.0 point to 42.3 points.

The seasonally adjusted Australian Industry Group-PwC Australian PMI indicates a further month of contraction in the manufacturing sector. In fact the PMI at 42.3 (below 50 indicates contraction) is one of the lowest in the world in comparison to the August PMI results for the USA 50.6, Eurozone 49.0, Japanese 51.9, Chinese 49.9.

The decline in manufacturing was especially pronounced in the food and beverages, wood products and furniture, transport and miscellaneous sub-sectors with industry participants cautious about the outlook based on reduced domestic demand, strong Australian dollar, increased overseas competition and uncertainty surrounding the carbon tax.

Queensland was the only state to record an expansion in manufacturing activity and the only two manufacturing sub-sectors to record expansions were clothing and footwear and basic metals.

Seasonally adjusted, the production sub-index fell 4.7 points to 39.2, indicating that manufacturing output contracted for the third consecutive month.

The fall in manufacturing output was led by decreases in production of textiles, paper, printing and publishing, chemicals, petroleum and coal products, fabricated metals and the miscellaneous sub-sectors.

The seasonally adjusted employment sub-index decreased 2.7 points to 45.7 in September, remaining below the 50 point level that seperates contraction and expansion. Importantly this marks the 11th month of a decline in manufacturing employment.

Click here to View the September PMI in full.