AIG Performance of Manufacturing index for July, out very early at 50.7
- prior was 48.9
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AIG Performance of Manufacturing index for July, out very early.
- Up 1.7 points from June
- Into expansion after 8 months of contraction
- Sub sectors to expand in July were food, beverages and tobacco (broadly stable at 51.7 points) and wood and paper products (up 13 points to 67.2)
- The large metal products, machinery and equipment, and petroleum, coal, chemicals and rubber products sub-sectors all contracted this month (i.e. below 50 points)
- Four of the five activity sub-indexes were above 50 points: new orders expanded for the third consecutive month (51.9); and manufacturing employment increased by 4.7 points to 50.2, following seven months of contraction. On the negative side exports contracted, falling 3.5 points to 48.8
- Both the stocks and sales sub-indexes remained in contraction, albeit at decelerating rates
- Wages and input costs continued to grow – the average wages sub-index climbed 13.1 points to 69.6 (unadjusted)
Australian Industry Group Chief Executive, Innes Willox:
- “Despite very tough conditions continuing in July, the manufacturing sector showed resilience in the face of strong headwinds with its first shift into growth territory this year.
- “Production, new orders and employment were all higher, providing welcome reward for manufacturers’ ongoing efforts after a very disappointing first half of the calendar year.
- Nevertheless, respondents expressed renewed concern about the strong Australian dollar. The high currency is maintaining intense pressure on exporters and import-competing businesses facing weak demand and low prices for locally made products.
- Further, with wages and input costs continuing to edge higher, there were very few signs that manufacturers’ margins are recovering sufficiently to attract much-needed investment into the sector.”
