7/28/2019 Pmi May13 Final

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JAPANESEPMI

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SAISMP

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AUST

RALIANPMI

CHINESEPM

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MAY 2013

MANUFACTURING MALAISECONTINUES IN MAYKEY FINDINGS The latest seasonally adjusted Australian Industry Group

Australian Perormance o Manuacturing Index (Australian PMI)

rose 7.1 points to 43.8 in May. It recovered much o Aprils sharp

decline, to be broadly in line with the average (negative) level

seen over the past year.

This marks the 23rd consecutive month o contraction in the

sector (with 50 points marking the separation between expansion

and contraction). Interest rate cuts by the RBA over the past year

appear to have had little impact on activity levels thus ar.

The capacity utilisation rate is now below 70%, which is only

just above the levels recorded during the GFC. And although still

registering expansion (readings above 50 points), the input prices

and wages growth sub-indexes ell to their lowest levels since

June 2009.

Impediments noted by manuacturers in May included: continued

weakness in housing construction; low levels o business

conidence and investment intentions; rising energy costs; the

high Australian dollar; public sector spending contractions;

ierce competition rom imports; lat local demand; and reduced

conidence due to the Federal Budget and impending election.

The exchange rate depreciation through the middle o May was

associated with a modest improvement in the exports sub-index,

although at 28.5 points, it continues to indicate a sharp decline in

export orders (or a 10th consecutive month).

SECTORS In three month moving average (3mma) terms*, all manuactur-

ing sub-sectors in the Australian PMI contracted in May.

The activity index o the machinery and equipment sector

shows little sign o improvement, suggesting that a recovery in

non-mining business investment is still some time away.

Production o non-metallic mineral products (including glass,

plaster, and concrete) also remains depressed, in line with the

low level o building approvals and residential construction.

On a brighter note, in 3mma terms, the activity index o thetextiles, clothing and other manuacturing sub-sector has

increased modestly over 2013, possibly relecting improvements

reported by household-oriented sectors in the Australian PSI.

* This month we present the sub-sector indices in the Australian PMI as three-monthmoving averages, in order to more accurately identiy the trends emerging rom the(relatively volatile) monthly data.

PRODUCTION AND CAPACITYUTILISATION Seasonally adjusted, the production sub-index in the Australian

PMI rose by 13.0 points to 46.1 points in May.

This marks the 14th consecutive month o declining production

levels in the Australian PMI.

All sub-sectors recorded a all in production levels in May except

or the ood, beverage & tobacco sub-sector, which expanded. In line with the prolonged period o decline in production

levels, capacity utilisation or the manuacturing sector recorded

68.9% in May (not seasonally adjusted), which is only slightly

above the levels recorded during the global inancial crisis

in 2009.

This suggests there is a growing amount o spare capacity in the

manuacturing sector, which is likely to limit employment and

investment growth over the remainder o this year.

CapacityUtilisation(%)

ProductionDiffusionIndex(Points)

Capacity Utilisation

Production

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Food, beverage & tobaccoproducts

Textiles, clothing & othermanufacturing

Wood & paper products

Printing & recorded media

Petroleum, coal, chemical &rubber products

Non-metallic mineral products

Metal products

Machinery & equipment

Australian PMI

3 month moving average

0 10 20 30 40 50 60 70 80 90 100

IncreasingDecreasing

Diffusion Index Apr 13 May 13

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3 month moving averageAustralian PMI

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43.8

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54.6

APR

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7/28/2019 Pmi May13 Final

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AUSTRALIAN PMI

urther Information Results are based on responses rom around 200 companies rom a rotating sample o manuacturers. An evaluation o the Australian PMI as well asther economic research and analysis can be obtained rom the Ai Group website at http://www.aigroup.com.au/economics.esults or capacity utilisation, average wages and output prices to June 2007 based on quarterly surveys. From this point data will be collected in the monthly PMI survey.* Number o months moving in current direction.ew monthly seasonal adjustment factors were applied in April 2013.ew industry classification applied from December 2012 (and back-dated) based on the ANZSIC 2006 coding system and 2011-12 weights.isit http://www.aigroup.com.au/economics for further economic analysis and information.

WHAT IS THE

AUSTRALIAN PMI?

The Australian Industry Group

Australian Perormance

o Manuacturing Index

(Australian PMI) is a seasonally

adjusted national composite

index based on the diusion

indices or production, new

orders, deliveries, inventories

and employment with varying

weights. An Australian PMI

reading above 50 points

indicates that manuacturing

is generally expanding; below50, that it is declining. The

distance rom 50 is indicative o

the strength o the expansion

or decline. Survey results are

based on a rotating sample

o manuacturing companies

each month.

More inormation can be

obtained rom the Ai Group

website www.aigroup.com.au.

CONTACT

Innes Willox

Chie Executive

Ai Group

Tel 03 9867 0111

INTERNATIONAL

PMI DATA

Markit Economics

www.markiteconomics.com

CIPS Australia

www.cipsa.com.au

The Australian Industry Group, 2013

This publication is copyright. Apart

rom any air dealing or the

purposes o private study orresearch permitted under applicable

copyright legislation, no part may be

reproduced by any process or means

without the prior written permission

o The Australian Industry Group.

Disclaimer The Australian Industry

Group provides inormation services

to its members and others, which

include economic and industry

policy and orecasting services.

None o the inormation provided

here is represented or implied to

be legal, accounting, fnancial or

investment advice and does not

constitute fnancial product advice.

The Australian Industry Group does

not invite and does not expect

any person to act or rely on any

statement, opinion, representation or

intererence expressed or implied in

this publication. All readers must make

their own enquiries and obtain their

own proessional advice in relation

to any issue or matter reerred to

herein beore making any fnancial or

other decision. The Australian Industry

Group accepts no responsibility or any

act or omission by any person relying

in whole or in part upon the contents

o this publication.

AIG13084

May 2013 April 2013 Monthly Change Direction Rate of Change Trend** (Months)

AUSTRALIAN PMI 43.8 36.7 7.1 Contracting Slower 23

PRODUCTION 46.1 33.1 13.0 Contracting Slower 14

EMPLOYMENT 46.6 39.3 7.3 Contracting Slower 19

NEW ORDERS 42.3 32.4 9.9 Contracting Slower 9

NVENTORIES 44.3 46.4 -2.1 Contracting Faster 2

SUPPLIER DELIVERIES 38.9 41.1 -2.2 Contracting Faster 15

NPUT PRICES 54.7 57.0 -2.3 Expanding Slower 132

EXPORTS 28.5 24.5 4.0 Contracting Slower 10

SELLING PRICES 41.4 40.3 1.1 Contracting Slower 26

AVERAGE WAGES 52.9 57.0 -4.1 Expanding Slower 49

APACITY UTILISATION (%) 68.9 68.6 0.3 Increase - -

NEW ORDERS AND EXPORTS The new orders sub-index in the Australian PMI increased by 9.9

points to 42.3 points in May (seasonally adjusted).

The ood, beverage and tobacco sub-sector had an increase in

new orders in May (reading above 50), but all other sub-sectors

recorded a contraction in new orders in May (unadjusted data).

In particular, the metal products; and machinery & equipment

sub-sectors both recorded sharper contractions in new orders

levels during the month.

The exchange rate depreciation through the month o May was

associated with a modest rise in the exports sub-index, although

at 28.5, it continues to point to a sharp all in export orders.

EMPLOYMENT AND AVERAGE WAGES The seasonally adjusted employment sub-index in the Australian

PMI rose by 7.3 points to 46.6 in May.

Employment levels contracted most sharply across the metal

products; and machinery & equipment sub-sectors.

Although conditions acing manuacturing remain challenging

and manuacturing employment has been alling in aggregate,

moderate wages growth continued to be reported by

manuacturing businesses in May, with the average wages

sub-index moderating to 52.9 points (seasonally adjusted).

Wages growth is particularly low in the metal products;

machinery & equipment; and ood, beverages and tobacco

sub-sectors.

FINISHED STOCKS AND DELIVERIES Manuacturing inventories contracted again in May, with the

inventories sub-index in the Australian PMI alling 2.1 points to

44.3 (seasonally adjusted).

Inventories contracted sharply across the ood, beverage &

tobacco products; metal products; and machinery & equipment

sub-sectors.

The deliveries sub-index declined 2.2 points to 38.9, marking the

15th consecutive month o contraction.

In line with reports o declining sales and new order levels,

deliveries ell across the ood, beverage & tobacco products;

metal products; and machinery & equipment sub-sectors.

NPUT COSTS AND SELLING PRICES Input cost growth moderated urther in May, with the seasonally

adjusted input costs sub-index alling 2.3 points to 54.7 points.

This is the lowest level or this sub-index since June 2009,

relecting a prolonged period o weak demand, moderating

commodity prices and increasing spare capacity in the sector.

Selling prices ell or the 26th consecutive month, with the

average selling price index recording 41.4 points (readings above

50 indicate an expansion in activity with the distance rom 50

points indicative o the strength o the increase).

This all in prices indicates that widespread price discounting

continues throughout the sector, as manuacturers seek to

compete globally in a very weak demand environment and

against ongoing strength o the Australian dollar.

The continuing gap between input prices and selling prices iscontributing to a worsening proit squeeze in manuacturing,

with national data showing manuacturing nominal proits and

proit margins tumbling through 2012.

May10

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D el iv er ies F in ished S tocks

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iffusion

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