Manufacturing conditions flat in Oct: Ai Group

The Australian Industry Group (Ai Group) has released its October Performance of Manufacturing Index with the results showing an easing of 0.6 points to a broadly stable 49.6.

Readings below 50 points indicate contraction in activity, with lower results indicating a faster rate of contraction.

This is the third month of flat conditions, following positive results between February and July.

“Australian manufacturing is in a holding pattern, with three straight months of flat results,” Ai Group CEO Innes Willox said.

“Demand conditions in the market remain stable, but longstanding supply-side problems, such as labour and supply chain shortages, continue to drag on the industry.

“Manufacturers are concerned that if economic conditions deteriorate – as this month’s Federal budget forecasts – they will be unable to maintain employment and production in the face of these pressures.”

The category of the index which relates to printing, the textile, clothing and footwear, paper and printing category, was up 13.9 points (seasonally adjusted) to 53.8, coming second to food and beverages which was up 6.8 seasonally adjusted points to 55.4.

The PMI found the textiles, clothing, footwear (TCF), paper & printing products sector employed 76,700 people in August 2022 (9% of manufacturing employment, ABS data). This sector makes textiles, clothing, footwear, paper, cardboard, packaging, printed products and recorded media.

The index for this sector rose by 13.9 points to 53.8 points, indicating a lift from contraction in September to expansion in October (seasonally adjusted).

“Higher prices for inputs and freight, staff shortages and increased average wages were challenges in October. Some businesses reported difficulties in passing on higher costs to customers. Weather events affected some businesses in this sector,” the report found.

To read the full Ai Group report, please click here.

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