The steadfastly inept Australian Industry Group this morning released its PMI for February and rather than blast the universe with the news that the two and a half year manufacturing depression is ongoing, it cheerfully highlights a marginal improvement in the index:
Although manufacturing activity contracted for a 12th consecutive month in February, the pace of decline eased markedly from a month ago. The seasonally adjusted Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) rose 5.4 points to 45.6. (Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.)
Manufacturing is showing tentative signs of a pick-up following improvements in new orders, production and employment sub-indices during February, even though all remained below 50 points.
The decline in manufacturing production slowed significantly in February as the production sub-index rose to 46.6 from 40.4 a month ago.
The employment sub-index rose 7.4 points to 47.5, its highest reading since June 2012 (albeit still contractionary).
The pace of contraction in manufacturing new orders also slowed, with the new orders sub-index rising 2.4 points to 41.8.
The food, beverage & tobacco products and wood & paper products sub-sectors expanded in February, while the printing & recorded media sub-sector recorded the steepest contraction.
Survey respondents cited a range of inhibitors, including: soft demand; weak confidence; and the strong Australian dollar. Exporters’ ongoing problems with the high dollar is evident in the exports sub-index this month, which remained close to last month’s all-time low, at just 31.2 points.
Wages and input costs continued to rise strongly in February, while the decline in selling prices persisted, indicating that profits for manufacturers remain under pressure.
The components are not encouraging. Across sectors only three improved with any vigour and the big mover is food which in my experience is seasonal (you know we binge at Chrissy, stocks get depleted, need restocking early in the NY etc):
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All components improved a bit, except exports:
I’d hoped that with the departure of Heather Ridout, the AiG might find dome cojonies. Nup.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
