A national survey has revealed a sharp decline in manufacturing activity across the clothing, footwear and textiles sectors.
The Australian Industry Group-PriceWaterhouseCoopers (PwC) Australian Performance of Manufacturing Index (PMI) is a seasonally adjusted national composite index which reports on the status of manufacturing in Australia.The results are based on the diffusion indices for production, new orders, deliveries, inventories and employment with varying weights.
The latest study, released today, recorded only a slight rise in manufacturing activity overall – 0.4 points to 47.8 – with readings below 50 indicating a contraction in activity.
While eight of the 12 sub-sectors recorded declines in November, the report noted that the decline in manufacturing activity was particularly pronounced in the clothing and footwear sub-sector.
Unadjusted, new order numbers also dropped in seven of the 12 sub-sectors, including the textiles; clothing and footwear sub-sectors, which recorded significant decreases in new orders.
Deliveries also fell in five sub-sectors, with the clothing and footwear sub-sector recording the strongest decline.
However, seasonally adjusted, the overall production sub-index rose 3.7 points to 49.6, with the result reflecting the balance between significant decreases in production for sub-sectors such as clothing and footwear; and textiles, and increases in certain other sub-sectors.
According to the survey, most respondents also remained cautious about the outlook for manufacturing, citing the negative influences of slowing sales, low levels of building activity and cheap imported substitutes. Concerns with respect to skilled labour shortages, rising utility costs and the introduction of the carbon tax were also cited.
Australian Industry Group chief executive Heather Ridout said the past year has put stress on manufacturing businesses and there is a need to address the issues in light of the recent results.
“Manufacturing conditions clearly remain tough and have been so for much of the past year, raising critical issues for policy-makers and businesses alike,” she said.
“While the Australian PMI shows an easing in the pace of decline in current activity and new orders, employment levels fell sharply in November suggesting a continuing loss of manufacturing capability. This highlights the importance of the Federal Government's manufacturing taskforce in developing a long-term strategy for the industry.”
PwC Australian head of industrial products Peter Le Huray echoed Ridout's comments.
“November's Australian PMI, shows a diversity of experience across the manufacturing sector. Activity expanded in the basic metals, chemicals, petroleum & coal, transport equipment and miscellaneous manufacturers in contrast to particularly sharp declines in activity in the clothing & footwear, fabricated metals, paper, publishing & printing and construction materials sub-sectors,” he said.
“However, manufacturers continue to seek opportunities to grow their businesses and, as evidenced by the fall in employment over the month, they are also trimming their operations where the outlook no longer justifies existing staff levels.”