The Australian industry group just released the latest update of its manufacturing PMI and it does not make good reading with April’s reading down another 3.1 points to 44.8.
Readings below show a sector in decline so new orders dropping 10.5 points to 41.8 is a worrying sign for industry while production itself fell 6.6 points to 42.6.
This is unequivocally bad news for manufacturing, manufacturing workers and the economy as AiG Chief Executive Innes Willox noted,
The softness in manufacturing also highlights the risks facing the broader economy and bolsters the risks of a contractionary budget that further slows activity by raising taxes or excessively cutting back on public sector demand. The immediate outlook for the sector worsened with respondents to the Australian PMI® survey citing a lack of new orders even after allowing for the usual run of seasonal holidays in April. Manufacturers also pointed to the renewed strength in the Australian dollar and the intensification of import competition to the detriment of sales of locally made products.
With data like this and the lower than expected inflation we saw released recently it would be reasonable to expect that the RBA will reiterate its commitment to low rates after its Board meeting next week and also that the Aussie dollar might come in for some more attention in the governors statement.
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