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Manufacturing sector continues improvement

Australia’s manufacturers are seeing improving conditions, according to the latest ACCI-Westpac Survey of Industrial Trends.

The survey has revealed strengthening conditions for the third consecutive quarter, with a rise in building activity and an improvement in service sector investment cited as positive contributors. The recent Budget’s jobs and small business focus is also being highlighted as a beneficial factor.

The Actual Composite Index rose to 58.4 points, a jump of 2.2 points from the result seen last quarter. The rise was driven by new orders, output and overtime.

“Expectations are positive, centred on new orders and output. The Expected Composite index was at 57.0 points, up 1.0 on March. In addition, a net 19 per cent, up from 8 per cent at the start of the year, expect the general business environment to strengthen over the next six months,” Senior Westpac Economist Andrew Hanlan said.

“Notably, the macro settings are more accommodative and dwelling approvals have hit fresh record highs. The RBA cut rates twice in 2015 after stability in 2014, the currency is lower and the Federal Budget included a small business package.”

Expectations are looking positive. New orders and output have driven a 1.0-point rise from the March quarter on the Expected Composite Index, now at 57.0. 19 per cent, compared to the 8 per cent registered at the start of the year, expect to see the general business environment grow stronger in the next six months, while 32 per cent are expecting a rise in turnover.

While manufacturers are seeing an upswing in mood, the findings point to a constrained cycle. Consumer spending remains below trend, mining investment is shrinking, and global fragilities persist.

“It is important that we consolidate the gains that have been made. We need certainty surrounding policy settings, which can best be achieved by the Senate passing the key measures from the Federal Budget,” Kate Carnell AO, CEO of the Australian Chamber of Commerce and Industry, said.

“We also need a steady pipeline of high-quality infrastructure projects to overcome our growing infrastructure deficit and unleash productivity improvements.

“And finalisation of the Trans-Pacific Partnership will open up new export opportunities for Australian businesses.”

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Guillermo Troncoso

Guillermo Troncoso

Guillermo is the Editor of Dynamic Business and Manager of film &amp; television entertainment site ScreenRealm.com. Follow him on <a href="https://twitter.com/gtponders">Twitter</a>.

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