TCF, paper and printing sector in decline amidst manufacturing growth: Ai Group

The textiles, clothing, footwear (TCF), paper and printing products sector in Australia is facing a decline in growth regardless of a “record” growth rate in manufacturing in June, according to the Ai Group.

In its The Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI), it found that the TCF, paper and printing sector recorded an index of 52.8 points in June, 3.0 points less than the month prior.

“The index for this sector fell 3.0 points to 52.8 points, indicating expanding activity in June, but at a slower pace than in May,” it identified.

“Respondents in this sector reported lower production and sales and were particularly impacted by the Victorian lockdown in June.”

This sector employed 84,000 people in May 2021, amounting to 10 per cent of manufacturing employment as noted by ABS data, Ai Group added.

However, the manufacturing space, in general saw an uplift in growth for the month of June.

The index found that its growth rose by 1.4 points to 63.2 points and that it was the ninth consecutive month of recovery for the Australian PMI following the severe disruptions of COVID-19 in 2020.

“This was the highest monthly result since the Australian PMI commenced in 1992. Results above 50 points indicate expansion, with higher results indicating a faster rate of expansion,” the index identified.

It also found that across the manufacturing sectors of food and beverages, machinery and equipment, building materials and chemicals, they all reached record highs in June.

“Respondents attributed surging activity to: strong demand from the construction and agricultural industries; improved exports; local customers seeking local suppliers; low interest rates; and end of financial year sales,” the report stated.

Food and beverages saw a 1.0 point growth to 64.8 points, machinery and equipment saw a 0.6 point growth to 65.8, while metal products saw a 2.6 point growth to 59.7 points.

Chemicals rose 0.8 points to 64.9 points, while building materials, wood and other grew 1.7 points to 66.4 points.

The report also found that the new orders index accelerated by 5.7 points to 70.6 points in June, indicating stronger customer demand than in May.

“This strength in new orders for Australian manufacturers suggests higher production and sales growth, ahead of the end of the financial year this month. New orders expanded in all sectors except for TCF, but they were particularly strong in food & beverage, machinery and equipment and building products,” the report added.

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