Businesses record slowdown in activity

AUSTRALIAN manufacturers have reported a slowdown in activity in July with new orders and output softening after a strong June, according to two new surveys.

The Commonwealth Bank/ Markit purchasing managers index eased back to 52.4 in July, unwinding June’s rise to 55.0 and the lowest reading in almost two years. Another survey by the Australian Industry Group found its main activity index dropped 5.4 points in July to 52.0 points, though that still left it above the 50.0 level that separates growth from contraction.

Both surveys showed a pullback in sales which tends to happen in July after the end of financial year promotions in June.

“Manufacturing activity has proved volatile of late,” said Michael Blythe, CBA’s chief economist.

“The sector continues to expand but a slowing is in train,” he said yesterday.

“The downside looks limited, however, with firms remaining very positive on the outlook for the year ahead.” The CBA survey’s measure of business confidence actually rose to the second- highest since data were first collected in May 2016.

There was some evidence of inflationary pressure with input costs high, which in turn motivated firms to raise output prices.

Export orders continued to grow, though at a slower pace, with respondents yet to report any notable impact from the tariff disputes between the US, Europe and China.