Price, labour pressures ease, but sentiment among manufacturers ‘weakest since GFC’

Manufacturing industry sentiment has fallen to levels not seen since the Global Financial Crisis, according to the ACCI-Westpac Survey of Industrial Trends for the September quarter.

Released on Tuesday morning, the survey showed a decline in new orders, a net five per cent of manufacturers reducing headcount, and a net 35 per cent of manufacturers expecting business conditions to worsen in the next six months. 

This indicated sentiment “weaker than pandemic-era observations and the weakest reading since the GFC” and a slight worsening versus the June quarter result of 32 per cent.

“The key message and the number one concern of manufacturers is weak new orders” according to the survey’s summary, and this was “consistent with the marked slowing of the Australian economy.”

It follows the June quarter of the survey indicating “that conditions within the manufacturing sector are stalling”.

The effects of inflation appeared to be easing, according to respondents. 

A net 37 per cent of manufacturers reported an increase in September for average unit costs, “well down” from 67 per cent in June and a peak of 76 per cent at the end of 2022, but were still above the pre-pandemic average of 23 per cent.

Labour pressures also eased over the period, and was not as “difficult to find”, at a net 4.1 per cent, “sharply lower from a net 51.4% in June, with rising labour supply now sufficient to meet additional labour demand.”

Picture: credit Australian Made/Maxitrans

Further reading

Manufacturers “extremely pessimistic” about conditions: ACCI-Westpac survey