Industry marks one year of contraction: Ai Group

The Ai Group Australian Industry Index fell in April 2023, dropping 14.0 points to -20.1 points.

Values below zero indicate contraction, and above zero indicate expansion. The distance from zero indicates how widespread the change is.

According to the association, this indicates contractionary conditions and further shows that the index has been in contraction for the past 12 months.

Key findings for April 2023 include:

  • Australian industry sank deeper into contraction in April on the back of falling demand and activity.
  • April is the 12th consecutive month that the Australian Industry Index has indicated industrial contraction.
  • Industrial activity/sales sunk deeply into contraction while the fall in new orders, which began in March, continued.
  • Upwards pressures on prices continued to be strong despite inflation having peaked.
  • All industrial subsectors are in contraction following declines in April. Manufacturing, chemicals, food & beverage and business services reported steep falls.
  • Capacity utilisation grew marginally to 81.2 per cent, reflecting ongoing labour and supply chain shortages.

Ai Group CEO Innes Willox said, “The Australian industry marks a disappointing anniversary in April – 12 months of continuous contraction. Activity and sales have fallen into contraction as demand is weakening, a pattern now affecting every subsector within industry.

“Yet price pressures and shortages for supply chains and labour remain acute, trapping industry between supply constraints and falling demand. The recent decision by the Reserve Bank to raise interest rates, while necessary to contain inflation, will add more pain to businesses facing a worsening economic outlook.”

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