Australia’s manufacturing sector ended the year in contraction, according to the Australian Industry Group’s monthly Performance of Manufacturing Index survey.
The Ai Group’s PMI was down 3.2 points overall for the month to 46.9, meaning it slipped back into negative territory after November’s marginally expansionary result.
Any result under 50 in the PMI indicates contraction, and above it, expansion.
“We would have hoped to have seen a stronger Australian PMI in the lead-up to Christmas, but the finding is consistent with other publicly released data,” said the AiG’s chief executive, Innes Willox.
As with November, four of the eight sub-sectors tracked were in growth territory, led by Food, Beverages and Tobacco, which recorded a result of 60.4 (up 1.3 points).
Despite a falling dollar, which meanwhile hit a five-and-a-half-year low this morning, conditions remained difficult for the industry for a number of reasons. These included tight margins, with the input costs sub-index up to 70.3.
“Respondents to the Australian PMI welcomed the further depreciation in the Australian dollar, but noted that the level of the dollar continues to encourage strong import competition,” said Willox.
“Business sentiment and appetite for investment remain weak. The closure of Australian automotive assembly facilities now under way, plus the rapid decline in mining investment activity, are also weighing heavily on demand for locally made machinery inputs and components.”
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