Australia’s economy continues to struggle to find its legs.
The mining-driven economy got slammed as soon as its emerging market export partners like China slowed down.
And despite a pick up in China, Australia has yet to see the benefits.
It’s “a credit bubble built on a commodity market built on an even bigger Chinese credit bubble,” wrote strategist Dylan Grice in a note last year.
Earlier today, we got another round of ugly economic stats via the Australian Industry Group’s January PMI report.
Its manufacturing PMI slumped to 40.2 January, down fom 44.3 in December.
Any reading below 50 signals contraction.
Here’s a breakdown of the sub-indices. As you can see, exports are particularly horrific:
Here’s a historical look at headline PMI:
Here are the key points (verbatim) from the latest report:
- Manufacturing activity contracted for an 11th consecutive month in January, with the seasonally adjusted Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) recording a level of 40.2, down from 44.3 one month ago. (Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).
- The contraction in manufacturing new orders worsened, reflecting weak global demand and a softening Australian economy. The new orders sub-index fell 6.3 points to 39.4 in January.
- The manufacturing production sub-index remained firmly in the red, at 40.4 in January, down by 2.1 points from December.
- Only the wood & paper products sub-sector expanded in January, while the contraction in the other sub-sectors, except petroleum, coal, chemical and rubber products, eased.
- Survey respondents remained cautious about the outlook. They cited a range of inhibitors including: soft demand; weak confidence; and the strong Australian dollar.
- Wages and input costs continued to rise in January, while the decline in selling prices persisted, indicating that the profits for manufacturers remain under pressure.