Australia manufacturing PMI rose 1.0 point to 33.7

Manufacturing activity in Australia fell for a seventh month in a row in December, though at a slightly slower pace than in November. Capacity utilization fell to its lowest level in 16 years.

The seasonally adjusted Australian Industry Group-PricewaterhouseCoopers Australian Purchasing Managers’ Index rose by 1.0 points to 33.7, still well below the 50-point mark separating expansion from contraction.

All components remained below 50 points indicating falls in the levels of each indicator. New orders and employment fell, though at a slower rate than in November, while production, inventories and supplier deliveries fell faster than in November.

Wages, selling price and input cost growth eased in December, while the fall in manufactured exports slowed over the month.

Lower official interest rates and government spending measures, global and local, have yet to have an impact on demand for manufactures.

The ongoing fall in activity reflects slower consumer demand, the weak construction sector and the impact of falling global demand for manufactures as reflected in international PMI measures.

Manufacturing activity fell in all states, particularly in Western Australia and Queensland.

Sectors

Seasonally adjusted, all 12 sectors saw activity fall in December. The construction materials; clothing & footwear; paper, printing & publishing; and miscellaneous manufactures sectors registered the largest declines in activity. The transport equipment; fabricated metal products; basic metal products; and wood, wood products & furniture sectors experienced relatively smaller declines in activity.

The food & beverages; chemicals, petroleum & coal products and textiles sectors saw some improvement, with activity falling significantly less than previously.

In contrast, the machinery & equipment sector saw activity fall significantly more sharply in December.

Production and Capacity

Seasonally adjusted, the production sub-index fell by 1.1 points to 29.3. Unadjusted, one sector, food & beverages, reported higher production, compared to none in November. The wood, wood products & furniture sector saw stable production. Ten sectors saw falls in production.

Production fell most strongly in the textiles; transport equipment; miscellaneous manufactures; construction materials; basic metal products; and fabricated metal products sectors.

The chemicals, petroleum & coal products; clothing & footwear; machinery & equipment; and paper, printing & publishing sectors experienced more moderate falls in output.

In line with weaker production, capacity utilization fell to 70.3 percent in December, down from 71.4 percent in November, the lowest reading recorded in the 16 years since the survey commenced.