Manufacturing activity still edged up in May but an industry survey suggests momentum eased from the previous month, while wage rises for workers in the sector appear increasingly elusive.
“While Australia’s manufacturing sector continued to grow in May, performance was mixed across the range of manufacturing industries and there are signs of further softening in the months ahead,” Ai Group chief executive Innes Willox said after the release of the Australian Performance of Manufacturing Index on Monday.
The food and beverages sector – which employs 27 per cent of manufacturing workers – expanded at its fastest rate on record in May, the Ai Group said in its summary of the monthly poll of businesses.
“Manufacturers in the ‘food and beverages’ sector continue to report buoyant conditions, with the index for this sector reaching a record high,” the report said.
The index also pointed to expansion for manufacturers of building-related products that include glass, bricks and furniture.
“Respondents selling products into non-residential construction, commercial buildings and defence industry suppliers reported winning new contracts,” the Ai Group said.
The report said a further contraction in the metal products sector and the machinery and equipment segment reflected slowing economic conditions more generally.
The sector encompassing textiles, clothing, footwear, printed products and recorded media also shrank during the month as demand reportedly reduced.
“Respondents reported fairly negative conditions this month, with some noting weak consumer spending as a hindrance to new orders,” the Ai Group said, adding that it was the weakest result for the sector since October 2018.
The PMI’s average wages index fell 2.2 points to 55.5 points in May which, while above the 50-point mark separating growth and contraction, was its lowest monthly result since March 2017.
“It indicates that fewer manufacturing businesses are now implementing wage rises compared to the recent peak in Q3 of 2018,” the report said.