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Jobs and manufacturing decline

Wednesday, 4 Mar 2009 ( #400 ) - Australia
Local News Story
AiGroup chief executive Heather Ridout.
Manufacturing activity in Australia has fallen for the ninth successive month, according to the Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI).

The index, released this week, registered 31.7 in February, a fall of 4.9 points on the previous month and remaining well below the 50-points level separating expansion from contraction. The fall in activity is very broad–based, with falls in 10 of the 12 manufacturing sub-sectors.

"For manufacturing in particular, the impacts of the global crisis are now compounding the difficulties associated with the structural changes that have been under way in the sector in recent years," says AiGroup chief executive Heather Ridout.

The manufacturing employment sub-index recorded a disturbingly low level of 32.8. This was a particularly sharp fall of almost 10 points in February. The manufacturing sub-index has recorded an uninterrupted run of falling employment in each month over the past year. Like manufacturing activity, the fall in employment is also very broad-based. No sub-sector recorded a rise in employment in February.

According to Graeme Billings of PricewaterhouseCoopers, the market weakness which saw selling prices stagnate in February is unlikely to improve significantly in the near term.

"This will put further pressure on margins and mean that a focus on costs is the key strategy for managing the impact of the downturn on profitability. While slower growth in wages costs will help, a rethink of business plans and improved productivity will help to minimise unit costs.

"It is also important that firms maintain readiness for the upturn and, where feasible, continue efforts to sustain product innovation, maximise the benefits from global supply chains and retain valuable skilled workers," says Billings.
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