This morning, the Australian Industry Group (AIG) released the Performance of Manufacturing (PMI) index for December.
At 50.2, manufacturing activity was broadly flat for the month of December, but rose by 2.4 points from November when manufacturing activity contracted:
Overall, the report suggests that Australian manufacturing remains subdued, with falls evident in 7 of the 12 industries captured in the survey and Queensland the only state reporting an expansion in activity:
According to the press release attached to the survey:
The strongest expansions in December were seen in the miscellaneous manufactures; basic metals; paper, printing & publishing; and transport equipment sub-sectors. However, this lift in activity was largely offset by falls across the fabricated metals; chemicals, petroleum & coal products; construction materials; and textiles sub-sectors. Production levels and supplier deliveries increased in December. Conversely, manufacturers’ profitability continued to be squeezed as the rise in wages and input prices gained speed while selling prices continued to decline, albeit at a slower rate.
Australian Industry Group Chief Executive, Heather Ridout, said: “Manufacturing ‘mercifully’ fell across the line into positive territory in December – on the back of a pick-up in production and new orders – in what was a better end to 2011 than might have been anticipated after such a tough year. The result points to the resilience of Australian manufacturers against formidable headwinds. However, it needs to be borne in mind that the majority of the sub-sectors recorded declines, highlighting the continuing impact the high dollar, soft domestic demand and the uncertainty in the global economy are having on the industry. Therefore, while the tentative pick-up in manufacturing activity is encouraging, clearly the sector remains vulnerable to any renewed downturn in the global economy and to the underlying structural pressures associated with strong commodity prices,” Mrs Ridout said.
PwC Australian Head of Industrial Products, Peter Le Huray, said: “In spite of the current challenging economic conditions, pockets of strength in the Australian manufacturing industry remain. This suggests that the efficiency and productivity improvements achieved by the manufacturers are better positioning them to ride out a global economic downturn. To maintain this momentum, it is critical that manufacturers persist with streamlining business operations and continue to find more ways to increase efficiency,” Mr Le Huray said.
The full report can be downloaded here.
Final Pmi December 2011 Report
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