Declining manufacturing activity has been exacerbated by a significant drop in manufacturing new orders, according to a findings released by the Australian Industry Group (AI Group).


The Australian Performance of Manufacturing Index (Australian PMI) dropped 1.2 points to 44.1 in the month, where readings below 50 signify a contraction in activity.


A pullback in the mining sector, soft demand, stronger import competition, the strong Australian dollar and rising utility costs were among the factors cited as impacting manufacturing activity in September.


"The softer conditions for manufacturers recorded in September looks like continuing in the months ahead with a sharper decline in the forward-looking new orders sub-index.  Suppliers to the mining sector, which have generally been a source of encouraging news in recent years, reported sharp falls in new orders as the mining sector responds to reduced prices and an increased likelihood of reductions in demand,” AI Group’s Chief Executive Innex Willox said.


"The ongoing strength of the Australian dollar, together with further rises in wages and input costs and a continuation of reported falls in selling prices, exacerbated the squeeze on margins that has been evident for some time.  There are certainly no signs of any inflationary pressures that might inhibit further reductions in interest rates.”


The key findings for September are:

  • The September Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) contracted further in the month – falling 1.2 points to 44.1 (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).
  • New orders contracted for the seventh consecutive month – falling to 44.3.
  • Paper, printing & publishing (69.6) and textiles, clothing & footwear (55.3) were the only sub-sectors that recorded expansions.
  • Manufacturing production also remained in decline – at 45.5.
  • Wages (62.5) and input costs (57.1) continued to rise in September.
  • The decline in selling prices continued (41.2).


The full report can be found here