April conditions for manufacturers “devastating,” worst since GFC

The effects of the current pandemic have become apparent, with Australian manufacturing recording its biggest month-to-month fall in the history of the Australian Industry Group’s Performance of Manufacturing Index for April, following a rebound in March. 

The PMI dropped 17.9 points to record an overall result of 35.8 for the month. There was a decline for each activity index, and the overall PMI was at its lowest since April 2009.

A result below 50 indicates contraction.

The Ai Group had called the positive result in March “somewhat surprising” when it came out, and “almost entirely due” to a rush on food, groceries and personal care products. 

The drop in April was the biggest in the 28-year history of the PMI.

Ai Group chief executive Innes Willox called the month’s conditions “devastating” for manufacturing companies and employees.

“Across the diverse manufacturing sector, the steepest deteriorations in performance were in sectors covering textiles, clothing, footwear, paper & printing; building, wood, furniture and other products; metal products; and machinery & equipment,” he said in a statement.

Only two segments of the industry recorded results above 50. Food and beverage dropped 1.6 points for the month to 52.6, and chemicals – which includes cleaning products and hand sanitisers – rose 1.3 points to 51.4.

“The active support of the federal government and each of the state and territory governments is greatly appreciated as is the overwhelmingly cooperative efforts of the manufacturing workforce,” added Willox.

“With new orders down to such low levels and due to the widespread nature of this disruption, we hope but do not expect conditions to turn around in the next couple of months. The sector is determined to come out of this with renewed strength.”

Dr Jens Goennemann, managing director of the Advanced Manufacturing Growth Centre, agreed that times were tough, but said Australian manufacturers were tougher.

“The Australian manufacturing sector’s response to the COVID-19 crisis is demonstrating just how capable, adaptable, and resilient our industry can be,” aid Goennemann.

“Announcements from the past month prove Australian manufacturers continue to find a way to adapt.”

Full PMI results can be read here.

Picture: Ai Group

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