SYDNEY (Xinhua) – The Australian manufacturing sector contracted in December with fewer new orders, a new report revealed on Monday.
The Australian Industry (Ai) Group’s Performance of Manufacturing Index (PMI) dropped 3.2 points to 46.9, back below the 50-point level that separates expansion from contraction.
There was a 10.6-point fall in new orders to 43.7 in December, indicating slower growth over future months as well.
Employment rose 4.7 points to be expanding at 52.5, with most hiring occurring in the food, beverages, textiles, clothing, furniture and non-metallic mineral products sectors.
The rise in employment reflected expansions in these areas, with non-metallic mineral products expanding at the fastest pace of the sub-sectors, up 12.4 points to 62.6, while the large food, beverages and tobacco sector was up 1.3 points to 60.4.
However, printing and recorded media, petroleum and chemicals, metal products and machinery and equipment manufacturing all shrank last month.
Ai Group Chief Executive Innes Willox said the fading auto industry and a reduction in mining investment is impacting on machinery manufacturing.
“The closure of Australian automotive assembly facilities now under way, plus the rapid decline in mining investment activity, are also weighing heavily on demand for locally made machinery inputs and components,” he said in the report.
One factor that was helping was the recent decline in the Australian dollar, which hit a fresh five-and-a-half-year low against the US dollar on Monday.
That has shown up in a 2.9-point rise in exports to 51, indicating that they are growing, although Willox said the local currency is still relatively high.
“Respondents to the Australian PMI welcomed the further depreciation in the Australian dollar, but noted that the level of the dollar continues to encourage strong import competition,” he said.