An interesting survey result from the Westpac–ACCI Industrial Trends which covers the first quarter of 2012, with manufacturing activity remaining weak with pricing power “extremely limited”, as selling prices declined and expected to remain steady – i.e deflationary in real terms in the next quarter.
Here are some key points:
- Actual Composite edged lower in the March quarter to 47.4, from 48.2. This is the fourth straight sub-50 quarter (a reading below 50 means contraction)
- The Expected Composite rose to 51.6 in the March quarter, from 50.2. In the past six months, the Expected Composite has retraced a third of the decline experienced over the six months to September 2011.
- The ‘outlook for general business conditions’ net balance improved for a second consecutive quarter, but at –11%, it still remains well below the decade average of –2%.
- Although it improved marginally in the quarter, the level of the Labour Market Composite remains consistent with annual employment growth of less than 1.0% over the next six months.
For mind, this chart stood out in the report, although profit expectations have improved recently, and were strong post-GFC with the enormous internal and external stimulus, the weak trend is obvious:
This is thought mainly to be because of cost pressures, which increased in the recent quarter and are expected to rise further in the next quarter, and the high “continued strength of the Australian dollar and softer global growth”.
Keep adjusting manufacturers.