The OZ PMI is out today and, as expected, the news is still dour.
- The latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) was broadly unchanged in December, at 47.6 points (seasonally adjusted). This marks the second consecutive month of contraction in the Australian PMI® (50 points marks the separation between expansion and contraction), following a short-lived period of expansion (September and October) immediately after the Federal election.
- The Australian PMI® continues to show varying degrees of contraction across the sub- indicators. This month, contraction was particularly evident for the employment sub-index, which fell to below 50 points again, after a temporary expansion (above 50 points) last month.
- Across the sub-sectors, index changes remained highly variable (even in three month moving averages). Growth in food and beverages manufacturing continued in the month, albeit at a slower pace. The non-metallic mineral products, metal products and machinery and equipment sub-sectors continued to show contraction (i.e. below 50 points).
- Comments from survey participants indicate that the mild, post-election lift in local new orders has generally disappeared, partly owing to a retreat of business and consumer confidence, including concerns over the future of the automotive manufacturing industry. With GM Holden announcing that it would cease production by 2017, the outlook for domestic manufacturing is particularly worrying. Despite the recent decline, the Australian dollar remains relatively high and fierce import competition continues to weigh on demand for domestically made products and the manufacturing export markets remain very weak (with the exports sub-index staying broadly around the 30-point mark).
As usual the full report is quite detailed and well worth the read.
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