Australia's manufacturing continues to contract in April: survey

13:02, May 02, 2011      

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The Australian manufacturing activity has contracted again in April, largely due to the strong Australian dollar, according to a latest monthly manufacturing survey released on Monday.

The Australian Industry Group/PricewaterhouseCoopers (PwC) Australian Performance of Manufacturing Index (PMI) rose only 0.5 points in April to 48.4, the survey said.

A reading below 50 points indicates contraction in activity, making April the second contraction in a row.

Significant declines across transport equipment, textiles and miscellaneous manufacturing, largely due to the strong Australian dollar, kept the manufacturing sector in negative territory in April, the survey found.

Seven of the 12 manufacturing sub-sectors posted declines in activity for the month.

Australian Industry Group chief executive Heather Ridout said the continued weakness in the manufacturing index reflected the substantial erosion in the competitiveness of the industry related to the volatile and rising dollar.

"There is clearly a requirement for more proactive policies to build productivity in manufacturing through investments in workforce development, energy efficiency, the exploration of export opportunities and R&D (research and development)," Ridout said in a statement accompanying the survey on Monday.

Graeme Billings, Global Industrial Manufacturing Leader of PwC, an industry-focused assurance, tax and advisory services provider, said the strength of the Australian dollar was hitting manufacturers hard.

"Manufacturers are facing a most testing environment due to the strength of the exchange rate and consumer caution," Billings said.

"It is imperative for businesses to maintain the search for new opportunities, new markets, new product lines and new sources of industrial efficiency."

The survey found the manufacturing activity contracted in Victoria, Queensland and Western Australia, but expanded in the other states.

The Australian Industry Group - PwC Australian Performance of Manufacturing Index (Australian PMI) is a national composite index based on the diffusion indices for production, new orders, deliveries, inventories and employment with varying weights.

The survey results are based on a rotating sample of manufacturing companies each month.

Source: Xinhua
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