Challenging biz conditions in Australian industry in Sept: Ai Group

Indicators for activity/sales, inputs, new orders and employment all improved slightly, but remain in negative territory.

The sales price indicator fell to neutral, continuing a downward trend over the last six months. With input prices and wages remaining elevated, this points to growing margin pressure.

The seasonally-adjusted activity/sales indicator recovered slightly by 3.3 points, but continued to indicate contractionary conditions at minus 25.4 points.

The seasonally-adjusted contraction in employment eased by 6.3 points to minus 14.3.

On a trend basis, the activity indicator has been negative for 29 months and the employment indicator for 18 months.

The majority of respondents reported slowing demand in September. However, there are pockets of increased activity boosted by changes in seasonal demand.

The new orders indicator eased by 1.6 points but remains in contraction at -25.0 points.

In trend terms, the new orders indicator has hovered around -30 throughout 2024.

Input volumes improved from the previous month to be stable (-0.8). Input volumes have been volatile across 2024 and in trend terms are in contraction.

Many respondents reported concerns about slow orders and increased local and global competition; others had steady or increasing orders from existing customers.

Input prices increased slightly to 46.8, but were lower than the recent peak in July 2024 (63.8). The sales prices indicator declined by 16.1 points, falling to neutral for only the third month since the pandemic. The growth in average wages eased by 14.4 points to 33.3.

In trend terms, the sales price indicator has been declining since mid-2023, while the input price and wages indicator has been steady and elevated.

This points to growing margin pressures on industry across 2024, with industrial businesses unable to fully pass on rising materials and wage costs, a release from the Ai Group said.

Upstream manufacturing indicators moved in different directions but remained in negative territory. Chemicals declined by 5.9 points to minus 21.3, and chemical manufacturers reported lower sales, reduced competition amongst suppliers and significant margin pressures.

Capacity utilisation in Australian industry eased down to 78.4 per cent in September.

Fibre2Fashion News Desk (DS)