Manufacturing activity fell during April, according to the latest Australian Industry Group-PWC index, with the industry still under pressure from the higher dollar.
The figures show the index fell by a seasonally adjusted 5.6 points in April to 43.9, well under the 50-point level separating expansion from contraction.
“The decrease in manufacturing activity was largely due to significant contractions in the basic metals; textiles; wood products and furniture; clothing and footwear; and miscellaneous manufactures sub-sectors,” a report on the index said.
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Survey respondents cited softer demand and the strong dollar as just some of the pressures facing the industry.
“While it is a reading of only one month, the steep fall in manufacturing activity in April rings true and is of serious concern,” Australian Industry Group chief executive Innes Willox said in a statement.
“Manufacturers continue to be adversely affected by the strong dollar, comparatively high unit labour costs and rising energy prices.”
“Production, employment and new orders all fell sharply in April, pointing again to the importance of lower interest rates both in reducing borrowing costs and in easing pressures on the currency,” he said.
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“We are continuing to assess various options and expect to make a decision by mid-May.”
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The Australian sharemarket opened with little change today following weak leads from the US and Europe.
At the official market open, the benchmark S&P/ASX 200 index inched up 0.17% to 4,404.5 points and the broader All Ordinaries Index edged up 0.15% to 4,474.2 points.
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The return to recession, blamed on weak domestic demand only partially compensated by exports, comes barely two years after Spain emerged from the last downturn at the start of 2010.