The Australian Industry Group’s Performance of Manufacturing Index has found the industry contracted for the fourth straight month.
February’s PMI was released on Monday, tracking a 1.1 point fall from January to 44.3. This was the worst result in almost five years, and the first time there had been four straight months of sub-50 results since 2014.
Any result below 50 in the PMI indicates contraction.
Of six sectors tracked, only food and beverages recorded a result above 50. Six of seven activity indices shrunk, with only employment “broadly stable” at 49.1.
Most survey respondents were concerned by the drought, construction sector softness, and the general economic slowdown. For the first time, the Covid-19 coronavirus emerged as a concern.
“The disruptive effects of the coronavirus, including on supply chains, are deepening and adding to the slowdown that has been in train since the closing months of 2019,” said Ai Group chief executive Innes Willox.
“The coronavirus is negatively impacting the exports of fast-moving consumable items to China and a number of businesses reported supply chain difficulties arising from factory shutdowns in China.”
Dr Jens Goennemann, managing director of the Advanced Manufacturing Growth Centre, said there was no doubt global business conditions are under strain at the moment.
“However, we must not lose sight of the opportunities for advanced manufacturing to have significant impact be it in relation to energy, recycling, skills and rebuilding or recovery,” he added, referring to today’s plastic recycling announcements by the federal government.
“Just today, the Morrison Government flagged a focus on recycling, urging all entities to look at ways to combat waste. Already at the forefront of this focus are Australian manufacturers, who are tackling the issue head-on. Manufacturers such as Dresden Eyewear, Viridi, VSPC and research groups like NSW Circular have taken the lead and have developed solutions to our waste issue.”
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