Business conditions for manufacturers have suffered their biggest single quarter decline in 20 years, according to the most recent Australian Chamber-Westpac Survey of Industrial Trends.
Results of the quarterly survey were released on Wednesday, and based on responses taken from February 10 to March 3. The overall Actual Composite Index recorded a result of 45.0 for the March quarter, down from 56.1 in the December quarter and compared to 61.7 in the March quarter of 2019.
Andrew Hanlan, senior Westpac economist, said that the poor start to the year could be seen across all sub-components – from employment to new orders, output, backlog and overtime – and was largely due to demand and supply chain disruptions from the summer bushfires, drought, and the COVID-19 virus outbreak, as well as slowing housing construction.
“The survey shows a steady decrease in business conditions and confidence because of uncertainty around the impact of the coronavirus,” added Australian Chamber of Commerce and Industry CEO James Pearson in a statement on the survey.
“A number of key markers are down, including employment conditions. While the Federal Government’s initial economic stimulus package will go some way to restoring confidence in the manufacturing industry, we need to deal with supply chain disruptions that manufacturers are particularly exposed to.
“Further stimulus would help support SMEs and jobs at risk. We urgently need both sector-specific and economy-wide measures, including help for the stricken tourism, events and hospitality industries; bringing forward the personal income tax cuts and business tax cuts that have already been passed by the Parliament, and further measures to support businesses to keep people in jobs.
The weak results are consistent with the Australian Industry Group’s monthly Performance of Manufacturing Index, which found the sector to be in its fourth straight month of contraction in February.
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