01/05/2006 - 08:35

Manufacturing remains subdued in April: PMI

01/05/2006 - 08:35

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Manufacturing activity remained weak in April with flat production levels revealed, despite growth in new orders and exports, a survey by Australian Industry Group-PricewaterhouseCoopers has found.

Manufacturing remains subdued in April: PMI

Manufacturing activity remained weak in April with flat production levels revealed, despite growth in new orders and exports, a survey by Australian Industry Group-PricewaterhouseCoopers has found.

The survey called the performance of manufacturing index (PMI) fell 1.6 points to 50.3 in April.

An index above 50 indicates growth.

Below are the key findings from the survey + a release from Stephen Smith federal shadow minister for industry, infrastructure
and industrial relations:

Growth in manufacturing activity was flat in April, following a
moderate pick-up the previous month. The seasonally adjusted
Australian Industry Group/PricewaterhouseCoopers Australian
PMI™ eased 1.6 points to 50.3 (with a reading of 50.0
separating expansion from contraction).
■ The marginal expansion in activity was underpinned by modest
growth in new orders, stocks and supplier deliveries. Growth in
exports also strengthened.
■ By contrast, production was unchanged and employment fell
for the 10th consecutive month. Despite rising fuel costs, input
cost increases moderated in the month.
■ The number of sectors reporting growth in activity increased
from four to six, mainly among consumer-based sectors. Activity
expanded in four states (up from three previously), continuing
to decline in Victoria and South Australia.
■ New seasonal adjustment factors have been applied to the
national sub-indexes (excluding exports), resulting in revisions
to each time series. Seasonal adjustment factors also have been
applied for the first time to total activity in each sector and state.*
■ Based on the latest National Accounts, the Australian PMI™
suggests growth in non-farm GDP of over 2.5%, and growth in
manufacturing production of over 1.5%

 

Below is a release from Stephen Smith federal shadow minister for industry, infrastructure
and industrial relations:

Today's release of the April 2006 Australian Industry Group - PricewaterhouseCoopers Australian Performance of Manufacturing Index (PMI) again demonstrates the ongoing complacency of the Howard/Costello Government towards the Australian manufacturing industry.

The index shows that manufacturing activity slipped 1.6 points in April leaving the PMI at 50.3, reflecting fairly flat activity across Australia's manufacturing industry. Only half of all surveyed sectors reported any activity growth in the previous month.

This performance continues to hurt jobs, with manufacturing employment declining for the tenth consecutive month. This only demonstrates again that the Howard/Costello Government's neglect is hurting the development and retention of skilled employees in Australia's manufacturing industry.

Since the election of the Howard/Costello Government in 1996, more than 145,000 Australian manufacturing jobs have been lost with 60,000 of these occurring since the Government's re-election in 2004.

The Howard/Costello Government's policy complacency was reinforced with the release of the December quarter National Accounts figures, which showed that parts of Australian manufacturing were in fact technically in recession.

The recent release of the Australian Industry Group's report Manufacturing Futures: Achieving Global Fitness also confirms this complacency and neglect of our manufacturing industry stating that,

"...we need a clear set of objectives so we know where we are going..."

The truth is that the Howard/Costello Government has no strategy to deal with the issues surrounding the international competitiveness of Australia's manufacturing industry.

Labor believes that it is in our national interest to have a strong and vibrant manufacturing industry, especially the parts that are high value and high skills. As PricewaterhouseCoopers Industrial Products Leader, Graeme Billings, said of the latest results

"...manufacturers must continuously balance cost containment with investment in new growth opportunities, including skill development, market relationships, and new products and processes..."
By adopting a national approach with an emphasis on innovation, on doing things better, on being smarter and relying on our superior technical and intellectual knowledge, Australia's manufacturing industry can build back its international competitiveness.

The future of a viable and successful manufacturing industry, providing jobs for Australians, must be based on a foundation of skills, quality and innovation, not an industrial relations approach aimed at reducing wages, conditions and entitlements and removing job security.

Manufacturing activity remained subdued in April as flat production levels weighed on growth in new orders and exports, a survey has found.

The Australian Industry Group-PricewaterhouseCoopers performance of manufacturing index (PMI) fell 1.6 points to 50.3 in April.

An index above 50 indicates growth while an index below 50 indicates contraction.

Underpinning activity in the industry was modest growth in new orders and stocks together and a pick-up in exports.

Australian Industry Group chief executive Heather Ridout said while the strength in consumer-related sectors was welcome, the effects from the latest spike in petrol prices on household disposable income were yet to filter through.

"The implications of this Australian PMI result for interest rates, consistent as it is with an extended run of data, are obvious," Ms Ridout said.

"For the Reserve Bank of Australia to impose an interest rate rise on industry in these circumstances can only be counterproductive, reinforcing the already intense cost and competitive pressures on the sector.

"The rise in petrol prices, the strong rebound in currency and the continued discipline of wages and prices evident in the core CPI, provide ample counter to any perceived risk of the re-emergence of inflation beyond the target zone."

PricewaterhouseCoopers industrial products leader Graeme Billings said the recent improvement in activity was positive but that manufacturers needed to continue stripping out unnecessary costs and looking for ways to become more innovative.

"With market conditions likely to remain extremely competitive, manufacturers must continuously balance cost containment with investment in new growth opportunities, including skill development, market relationships, and new products and processes," Mr Billings said.

The strongest sectors were food and beverages and textiles, clothing and footwear.

Among the industrial-based sectors, only chemicals, petroleum and coal products reported growth in April.

The largest falls were in fabricated metals and miscellaneous manufacturing.


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