Trailer Magazine

Australian PMI downturn heralds call for fiscal stimulus: Ai Group

  • Posted on Tuesday 7th, January 2020.

The manufacturing of machinery and equipment in Australia remains stable amid a contraction in the broader manufacturing sector according to the Australian Industry Group (Ai Group).

Australian manufacturing sector performance improved slightly in December but for the first time since 2015 contracted over a period of two consecutive months.

Ai Group CEO, Innes Willox, said the negative result increases the need for government action to grow the economy.

“The downturn in manufacturing recorded in November and December is a clear warning of the growing risk of a more broad-based slackening of an economy already in the slow lane," said Willox.

"It adds weight to the view that serious consideration should be given to further fiscal stimulus," he said.

The food and beverage sector was reported to be the only segment of the manufacturing industry to experience growth in activity, increasing by 0.6 points to 61.8. Machinery and equipment and chemicals recorded stable figures of 50.4 and 49.3 respectively, while metals products, building materials, wood and other manufacturing, and TCF, paper and printing all contracted in December.

Factors leading to these figures, according to Ai Group, included drops in new orders, employment, finished stocks and production. Supplier deliveries and exports recorded a rate of expansion in December.

Drops in residential construction activity led to contraction in the segments of the manufacturing sector which supply the building industry.

The relatively competitive Australian dollar, according to Willox, is good news for manufacturers.

“The main bright spots were the food & beverages sector, which extended the upward trend recorded by the Australian PMI since 2012, and manufactured exports which are benefitting from the competitive level of the Australian dollar relative to other currencies," he said.

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