Gloomy outlook across industry

AUSTRALIAN manufacturers are more gloomy about the outlook for their sector, with the latest industrial trends survey adding to a recent stack of poor economic data.

The September quarter results compiled by the Australian Chamber-Westpac survey show there’s been a softening across all categories and in particular, a drop off in new orders.

Just 25 per cent of manufacturing businesses expect new orders to increase in the next quarter – down from 36 per cent in the previous survey and in line with the results from March – the results released last Wednesday show.

And overall, slightly more firms expect the general business situation to deteriorate over the next six months, a big turnaround from the last quarterly survey when a net 28 per cent expected things to improve.

“The construction sector is in downturn, led by home building. Consumer spending is declining in per capita terms, at a time of flat real wages,” Westpac senior economist Andrew Hanlan said.

“These dynamics are having negative spill-over effects to manufacturing

“Public infrastructure projects are a potential source of upside – although recently, there has been a gap in the project pipeline.”

The industrial trends come on top of the latest national accounts showing Australia’s economy grew just 0.5 per cent in the June quarter and 1.4 per cent over the year, and sluggish retail spending in July.

Australian Chamber of Commerce and Industry head James Pearson said there were some positive signs among the soft results, pointing to increases to exports and a lift in profit expectations.

“We urge the government to continue to look to ways to encourage business growth including tax measures to stimulate investment in plant and

WE URGE THE GOVERNMENT TO CONTINUE TO LOOK TO WAYS TO ENCOURAGE BUSINESS GROWTH INCLUDING TAX MEASURES TO STIMULATE INVESTMENT JAMES PEARSON

equipment and new technology; and policies that will lift productivity,” he said.

“Coming on the back of recent tax cuts and interest rate reductions, this will help to underpin economic growth and build the confidence of people in business to invest and create more jobs for the benefit of all Australians.”

The survey was run between August 8 and September 2.