Aussie manufacturers go from strength to strength
Australia's manufacturing sector saw further growth during May 2017, a new report has confirmed. With all the global fears relating to rising fuel costs, automation and technological innovations this is a fantastic sign for those Aussies tied to the robust manufacturing industry.
According to the Australian Performance of Manufacturing Index (PMI) from the Australian Industry Group, the sector recorded growth of 54.8 last month - anything above 50 indicates expansion.
This is the eighth consecutive month in which the sector stayed in expansion territory.
However, the growth rate was 4.4 per cent lower than the amount recorded in April, which means it slowed down during May.
A similar trend was apparent in all sub-indexes on the PMI, with all seeing growth but at a slightly reduced rate last month.
For instance, export-based manufacturers did particularly well, while equipment and machinery manufacturers shook off problems in the automotive industry to record growth.
However, the textiles, clothing and furniture sub-sectors contracted, as weak consumer spending, strong international competition and high energy costs all combined to have a negative impact.
The PMI also indicated a slowdown in the input prices sub-index, which fell by six points to 63.8 in May.
Wages, meanwhile, went up by three points to 61.4, while the selling prices sub-index stood at 56.2 - 2.7 points lower than in the previous month, but enough to ensure a fifth successive month of growth.
Innes Wilcox, chief executive of the Australian Industry Group, said the manufacturing sector has built on the growth recorded in the previous seven months throughout May.
"Demand is relatively elevated for most sub-sectors and employment, sales and new orders are all growing, albeit at more subdued rates," he observed.
"Exports remain a key source of growth, with many manufacturers strongly focused on growing their sales overseas despite stiff global competition."
Mr Wilcox went on to acknowledge that the "shrinking" automotive industry and "generally low" business investment are having an impact.
Nevertheless, he said the machinery and equipment manufacturing sub-sectors in particular again made progress last month, experiencing an "impressive recovery after an extended slump".
Mr Wilcox added that slower retail conditions are having "some negative impacts" for manufacturers, while elevated input costs are proving to be an "ongoing challenge" across the board, with rising gas and electricity bills proving one major problem at the moment.
Jens Goennemann of the Advanced Manufacturing Growth Centre has highlighted defence as one potential driver of future growth in the industry, as the government is investing heavily in this area at the moment.
Speaking with Defence Connect, he said: "For Australia, we need to transform, we need to be a globally competitive country, and we need to focus on areas where we're good at, and defence can be a fantastic primer for that."
However, he stressed that the notion that manufacturing in Australia is "close to death" is completely wrong.
Mr Goennemann suggested this is because manufacturing is not the same as production, so closing car assembly plants does not point to a wider problem in the manufacturing sector.
"The manufacturing, value-adding process starts with R&D, design, logistics, then production, sales and services," he said.
"So putting cars together is only one part. But actually, if you manufacture something and own the entire process of the whole entire value chain, we are in a much stronger position."