Challenging business conditions have once again been cited as keeping the Performance of Manufacturing Index (PMI) result for May below the expansionary figure of 50, yet only just. The PriceWaterhouseCoopers / AI Group report details how manufacturers are finding the current market conditions and reports accordingly.
Jumping 4.4 points from April to 49.2 in May, the Australian PMI is at least headed in the right direction despite continuing the trend of seven consecutive months of contraction.
One of the areas of concern from the May PMI result is the contraction of the otherwise-buoyant Food, Beverages and Tobacco sub-sector. The result of 49.3 is the first contraction for this sub-sector in 14 months and as noted by AI Group, is the single largest manufacturing sub-sector at around 20%.
Other factors firmly at play that affected the May PMI result include both the first federal budget brought down by the new coalition government and the resurgent strength of the Australian dollar.
Proving that there is no common theme across the manufacturing landscape, four sub-sectors expanded and four contracted in May.
- Petroleum, coal, chemicals and rubber products
- Non-metallic minerals
- Wood and paper products
- Textile, clothing and other goods
- Food and beverages
- Metal products
- Machinery and equipment
- Printing and recorded media
The gulf between selling prices and input costs continues to remain high, increasing the pressure on margins that has been prevalent for more than 36 reporting periods.
To download a two-page précis of the report, click here… PMI May 2014