In what has to pass as good news for Australian manufacturing these days, its ongoing recession slowed in October, according to today’s PMI:
The decline in manufacturing activity continued in October, albeit at a slower pace. The seasonally adjusted Australian Industry Group-PwC rose 5.1 points to 47.4. (Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decline.)
The decline in manufacturing activity was particularly pronounced in the clothing and footwear sector. In addition, sectors linked to the construction industry, including wood products and furniture, fabricated metals and construction materials continued to exhibit substantial weakness.
Most survey respondents remained cautious about the outlook for manufacturing, citing the negative influences of slowing sales, the strong Australian dollar, cheap import substitutes, and a weak construction market. Concern with respect to skilled labour shortages and the introduction of the carbon tax was also cited.
Wages and input costs continued to rise in October, while the decline in selling prices persisted, pointing to a narrowing of manufacturing profit margins.
Queensland and South Australia were the only States that recorded expansions in manufacturing activity.
Here is the sectoral chart which less horrible conditions across the segments:
New orders shrank at a less severe pace too for the fourth month in a row but are still in deeply negative territory:
So, some improvement, probably based on the little acceleration in economic activity we’ve seen since the faltenning of interest rate expectations since July. But, more imporantly, the single largest jump of any sub index between September and October was export orders:
No surprsie that in coincided with a tumbling dollar. I can only repeat, we are choosing to annihilate manufacturing.
