There are some days I get a little kick out schadenfreude but this in not one of them. Today’s AiG manufacturing PMI is a disaster:
Manufacturing activity contracted significantly in April as conditions weakened amid a strong Australian dollar, intense import competition, high energy costs and weak local confidence.
- The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) fell 7.7 points to 36.7 on a seasonally adjusted basis. (Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.)
- This is the lowest level the Australian PMI® has recorded since May 2009, with many of the key sub-indexes also dropping to levels not seen since 2009. The three-month moving average in April fell to 42.2 points from 43.4 points in March.
Here’s the headline chart:
This is no surprise really. The ABS capex intentions reading earlier in the year made it plain. The pain is universal:
Production and capacity utilisation both collapsed:
New orders and exports both collapsed:
This is not some bullshit productivity improving drive. It’s Australia’s industrial base going bankrupt at the same rate it did in the GFC, even as the mining boom it was supposed to help fuel runs into its own denouement. I mean, for heaven’s sake, this is where we should be looking for green shoots not ashes.
Australia’s elite policy makers have blundered badly. The RBA should cut 50bps next week and install macroprudential policy immediately.