EXPORTS GROW AS DOLLAR FALLS
THERE are green shoots of recovery in the manufacturing sector as the lower Australian dollar boosts exports.
The latest industry figures indicate manufacturing activity has risen for the first time in six months.
Australian Industry Group’s Performance of Manufacturing Index (PMI), released yesterday, rose 4.3 points to 52.3 in May, with the result indicating an expansion in manufacturing activity.
AiG chief executive Innes Willox said the fall of the Australian dollar (which is down 30 per cent from its US110¢ peak) had helped exporters recover some lost ground.
“This was a clear positive for performance in May, together with strong residential construction activity and very low interest rates, and helped propel the sector into expansionary territory for the first time in six months,” Mr Willox said. “There remains a fine balance, however, and the rapid decline in mining construction, the progressive closure of automotive assembly and subdued local business investment in machinery and equipment continues to weigh on local demand.”
Boat builder John Haines is upbeat about future prospects for manufacturers after a tough couple of years.
“It is probably the best it has been since before the Global Financial Crisis,” said Haines, chief executive of Wacol-based Haines Group. “It is still difficult but there has been an improvement.”
The Aussie dollar’s slide had helped because Haines’ main competition came from cheaper US products.
“The dealers are really starting to focus on us now with the (Aussie) dollar making our boats more competitive,” Mr Haines said.
The picture is less rosy for the broader economy.
Economists expect Australia’s gross domestic product, released tomorrow, to have slowed to 1.9 per cent in the March quarter, down from 2.5 per cent in the previous three months.
ANZ co-head of Austra- lian economics Felicity Emmett said housing remained the only sector to have responded in a typical cyclical fashion to low interest rates.
“Consumer spending growth remains moderate at best, weighed down by soft income growth and ongoing fragile household confidence,” she said. The latest business investment figures showed non-mining companies planned to reduce their spending over the next financial year. The Australian dollar was trading at US76.51¢ late yesterday. WITH GLEN NORRIS
IT IS PROBABLY THE BEST IT HAS BEEN SINCE BEFORE THE GFC John Haines