The pace of activity in the manufacturing sector slowed again in March, as the sector remains under pressure from the high Australian dollar.
The Australian Industry Group performance of manufacturing index (PMI) printed at 47.9 points in March, a decline of 0.7 points on February’s 48.6 points.
Readings below 50 indicate the industry is in contraction, while readings above 50 point to expansion.
Since November 2013, the PMI has printed below 50, indicating sustained contraction.
The economic outlook for 2014, from a business perspective, was looking fragile, Ai Group chief executive Innes Willox said.
“Subdued local demand and the newly resurgent dollar are weighing heavily against the efforts of manufacturers to rebuild their sales base in Australia and internationally,” Mr Willox said.
“High local production costs and rising input prices are still major barriers for those who are trying to compete internationally and against imports in the domestic market.
“The much-anticipated housing recovery remains weak in most states, consumer spending on non-food goods and local services is muted, and business attitudes to investment and hiring remain cautious.”
The report showed that employment across manufacturing was weak while manufacturing production levels also contracted.
It said businesses had voiced renewed concern over the recent appreciation of the Australian dollar.
“Domestic manufacturers continue to struggle in export markets,” the report said.
“The level and the recent appreciation of the dollar are reported to have resulted in more intense import competition and have further dampened local demand for Australian-made products.”
In March, the production sub-index of the PMI fell back below 50 points, following a brief expansion in February. However, the new orders sub-index moved higher in March to 52.3 points, signalling the first expansion in orders since October 2013.
