Factory output hits new low

Australia’s manufacturing base is still shrinking.

A survey just released shows that activity in this sector fell to its lowest level in nine months during May.

The survey, conducted jointly by the Australian Industry Group and PwC showed that the index  fell 1.5 points to 42.4 in May.

Readings below 50 indicate a contraction in activity and the distance below 50 reflects of the size of the fall.

The Group’s Chief Executive, Innes Willox, said the difficulties facing manufacturers had intensified in May.

“The RBA’s reduction in the cash rate early in the month and the slip in the dollar over recent weeks should have positive impacts over the next few months, Mr Willox said.

But these factors had been swamped in May by renewed household caution in the face of international and domestic uncertainties and weakness in residential and commercial construction.

“As well, the fundamental structural pressures facing non-mining trade exposed industries such as manufacturing continued to bite.

“It is critical that manufacturing policy measures being developed by the Government and the Opposition take into account both immediate pressures and the longer-term adjustment processes that are underway,” Mr Willox said.