Manufacturing down but construction and printing buck the trend

Australian manufacturing activity fell in April but two industry sectors went against the trend, according to a new report.

The Australian Industry Group-PwC Australian Performance of Manufacturing Index (PMI) dropped 5.6 points to 43.9 in April seasonally adjusted. Any reading below 50 indicates a contraction in activity.

“The decrease in manufacturing activity was largely due to significant contractions in the basic metals; textiles; wood products and furniture; clothing and footwear; and miscellaneous manufactures sub-sectors,” the report said.

Construction materials, paper, printing and publishing sectors went against the trend, recording an expansion in activity.

PwC partner Jeremy Thorpe said a flood of job cuts in the manufacturing sector resulted in a dramatically reduced PMI.

“April figures show 10 of the 12 manufacturing sub-sectors recording a decrease in activity,” Thorpe said.

“With job cuts continuing to be announced in the manufacturing sector it is probable the PMI will continue to decline irrespective of the likely Reserve Bank interest rate cut in May.”

Australian Industry Group CEO Innes Willox said while the reading is only for one month the steep fall in April is of serious concern.

“The fall in the PMI is consistent with what we are hearing from AI group members and a range of other data,” Willox said.

“Manufacturers continue to be adversely affected by the strong dollar, comparatively high unit labour costs and rising energy prices.”

South Australia and Western Australia were the only states to record expansion in manufacturing activity in April.