The Ai Group Australian Industry Index has fallen yet again in July, losing 2.8 points to -14.7 points (seasonally adjusted), indicating contractionary conditions yet again.
The index has been negative for the last 15 months since the start of the current interest rate rising cycle, according to the association.
Ai Group found that in July, the Australian PMI indicator fell to -25.6, indicating contractionary conditions in manufacturing not seen since the height of the pandemic.
It added that the employment, industrial activity and new orders indicators all weakened into broader contraction.
In addition, it found that price indexes all rose mildly in July, reflective of lower but still persistent inflation. The average wages indicator surged by 14.0 points to its highest level, indicating ongoing wage pressures in the tight labour market.
Ai Group said capacity utilisation fell marginally to 79 per cent, reflecting slowing industrial conditions.
Ai Group CEO Innes Willox said, “Australia’s economic slowdown has squarely hit industry. The Ai Group Australian PMI in July reveals manufacturers reporting pandemic-era conditions, while construction continues to struggle with structural problems.
“Indicators of sales, employment and new orders are all falling, while reported cost pressures continue to rise despite inflation having peaked.
“Of particular concern are wages, which are rising at a record pace while industry faces the threat of contractionary conditions. Changes to industrial relations laws will add unnecessary pressure to our already struggling industrial sectors.”
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