Sigh…I’m having an angry week.
Regular readers will know that I’m no fan of vested interests.
But I make one exception. Right now, the nation DESPERATELY needs a new vested interest body to support the non-resource tradable goods sectors of manufacturing, tourism and education.
I can’t remember a peep out of either the education sector or the tourism sector about the dollar sending them bankrupt. And the Australian Industry Group, the manufacturing lobby, is about as weak as our dollar is strong. Today’s manufacturing PMI showed March was another month of shrinkage for the sector. That’s six out of the last seven:
Yet, take a look at today’s PMI press release:
Australian PMI®: Strong exchange rate restricts manufacturing growth in March
Friday 01 April 2011
The strong Australian dollar together with weak domestic demand, rising overseas competition and the increasing cost of raw materials pushed the manufacturing sector back into the red in March according to the latest Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI®). The seasonally adjusted index fell 3.2 points to 47.9 bringing it below the 50 points level separating expansion from contraction.
The decline in manufacturing activity was most pronounced in the clothing & footwear, food & beverages, textiles and fabricated metal sub-sectors. After a lift in February, new orders were down again in March.
Australian Industry Group Chief Executive, Heather Ridout, said: “The major factor by a long way pressuring Australian manufacturing is the high dollar and this is predicted to remain high for a protracted period of time. The result portends the challenging conditions ahead for the manufacturing sector. However, the resilience of the sector should not be underestimated.
“The fall in the forward-looking new orders sub-index suggests that the weakness across manufacturing looks set to continue in the near term. Governments and the Reserve Bank need to be very mindful of these soft conditions in manufacturing when setting policies and interest rates. The upcoming Federal Budget will be an important opportunity to encourage skills development, innovation and capital investment in the sector,” Mrs Ridout said.
PwC Global Head of Industrial Manufacturing, Graeme Billings, said: “The very tough conditions confronting the sector are yet another reminder of the importance of manufacturers’ efforts to improve their businesses. Leading manufacturers are active in a range of areas including product and process innovation, energy efficiency and workforce development. Even small improvements make a critical difference at times like those currently facing the industry,” Mr Billings said.
Australian PMI® Key Findings for March:
• The latest Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI®) fell 3.2 points to 47.9 in March (readings below 50 indicate a contraction in activity).
• Manufacturers cited the strong Australian dollar, weakening domestic demand, rising overseas competition and the increasing cost of raw materials as factors behind March’s result.
• Clothing & footwear, food & beverages, textiles and fabricated metals were the sub-sectors that experienced the greatest downturn in the month.
• The new orders sub-index was down 3.2 points in March.
• Wages and input costs both expanded in the month.
• Production levels were up in March, with the sub-index registering 50.9.
• Queensland and Western Australia were the only two states to record manufacturing growth.
What is this about “restricted growth”. It’s a raging recession for the sector.
Here we are, governed by the most hopelessly vulnerable to vested interests government in my adult lifetime, and the AIG gilds the lilly for it suffering members.
