‘Signs of improvement’ within the industry, major survey finds

The quarterly ACCI–Westpac Survey of Industrial Trends has found signs of improvement in conditions among manufacturers, though the general business outlook from companies for the next six months, while improved, “remains deeply pessimistic”.

A summary of the survey, which has been running since 1966, notes that national accounts figures indicate the Australian economy remaining in the slow lane. Manufacturers are, however, “finding some pockets of demand”.

The survey came out with an Actual Composite improving to 56 from 54.6 in the June quarter, with 50 indicating the breakeven threshold.

“The September survey reported an ongoing recovery in new orders, a consolidation in output and a bounce in overtime, but a decline in employment,” explained Westpac economist Ryan Wells in a statement on Thursday.

“Growth in new orders was firmer than expected, with a net 20% of firms reporting a rise in September, following a net 21% in June.

“Output growth was little-changed over the same period however, with a net 14% of firms reporting an increase. Firms are drawing on inventory stocks to meet demand, but in a context where output is less responsive, order backlogs are growing.”

The survey notes that Australian and global manufacturing cycles tend to line up, with soft demand and supply chain problems dragging on advanced economics at the moment.

While Australian manufacturers “have been relatively more insulated from these dynamics”, they remained concerned with costs and input constraints.

Profitability expectations shifted in the quarter from neutral to modestly positive, though “elevated and volatile cost pressures continue to have a significant bearing over the sector’s profitability” the report notes.

Picture: credit Australian Made/Maxitrans