Manufacturers experienced another tough month in September with the Australian Industry Group - PwC Australian Performance of Manufacturing Index (Australian PMI®) down 1.0 point to 42.3, indicating a further weakening in the sector.

The sub sectors experiencing the deepest decline in activity were food and beverages; wood products and furniture; transport equipment; and miscellaneous manufactures.

Australian Industry Group Chief Executive, Heather Ridout, said: "Caution continues to be the order of the day with most respondents uncertain about the outlook and citing little visibility in relation to business conditions beyond the short term. The usual suspects of weak domestic demand, the strong Australian dollar, increased overseas competition and uncertainty surrounding proposed carbon pricing, continue to weigh on the sector.

"The Federal Government has two important meetings this week in the Tax Forum and Jobs Forum. The further decline in the manufacturing sector recorded by the Australian PMI® is further evidence that the Tax Forum's focus on the pressures of the two speed economy is appropriate. Further, the fact that the Australian PMI® is suggesting 11 consecutive months of job losses heightens the importance of focusing on the pressures on manufacturing jobs at the Jobs Forum," Mrs Ridout said.

PwC Australian Head of Industrial Products, Graeme Billings, said: "Manufacturers continue to battle very tough business conditions. Businesses are intent on further efficiency improvements, innovation and trialling new products, services and markets. Key ingredients for success in the current environment are striving for excellence, relentless marketing and keeping close to customers," Mr Billings said.

Australian PMI® Key Findings for September (seasonally adjusted):

  • The Australian PMI® was down 1.0 point to 42.3, indicating a further contraction in the sector.
  • Ten out of the 12 manufacturing sub-sectors recorded declines in activity in September.
  • The production sub-index fell 4.7 points to 39.2.
  • The new orders sub-index rose by 1.2 points to 44.6.
  • The employment sub-index decreased 2.7 points to 45.7 in September, marking the eleventh straight month of decline in manufacturing employment.
  • The wages sub-index fell, down 7.1 points to 61.9 in September.
  • The increase in input costs persisted in September, with the sub-index up 0.4 points to 64.1.