The Australian Chamber of Commerce and Industry – Westpac Survey of Industrial Trends for the June quarter 2019 released today, shows a slowing in manufacturing business growth but a rise in sentiment post-election.
“The Westpac-AusChamber Actual Composite Index declined in June 2019 to 61.5, down from 61.8 in March, to be a clear notch below the 63.5 in mid-2018,” Westpac Senior Economist, Andrew Hanlan, said.
“This confirms that the loss of momentum from mid-2018 persisted over the first half of 2019.
“While not a weak reading, conditions over the first half of 2019 were the softest since late 2016.
“Manufacturing new orders are rising, but at a slower pace than evident over 2017 and 2018, the survey reports.
“The manufacturing sector is being impacted by cross-currents. The housing downturn and spillovers from the drought are clear negatives. Countering this is the boost from the lower Australian dollar and from the upswing in public infrastructure investment.
“Exports are maintaining a modest uptrend, which is expected to continue, with the lower Australian dollar providing some support at a time of softer global conditions.
“The survey, which was conducted after the Federal election, reveals that optimism among manufacturing firms has rebounded after faltering earlier in the year, although it remains below the levels prevailing in 2017.
“In June, a net 28% of firms expect the general business environment to improve over the next six months, up from 12% in March.
“Respondents expect new orders to strengthen in the coming three months, rising from a net 25% to a net 36%. In part, this likely reflects an anticipated boost from RBA rate cuts and cuts to income tax.
“Investment intentions of firms have rebounded after a soft start to 2019, once clouded by uncertainty ahead of the Federal election. A net 21% of firms plan to increase equipment spending over the next twelve months, up from 12% in March, to be back in line with the readings evident in 2018.”
Australian Chamber CEO, James Pearson, said:
“The survey indicated there had been some improvements, with rising output, growth in new orders and the backlog of orders, and an increase in overtime for workers. But this was not enough to stem the fall in the Composite index, which reflects recent signs of a slowing economy and flat employment growth over the past three quarters.
“It all points to the need to strengthen the economy and improve business conditions for the manufacturing sector and business generally.
“It has become even more important that the new Parliament pass the Government’s tax package in its first sitting in July to stimulate consumer spending. We also need to invest in developing skills and we need to reduce energy costs.
“We encourage the Government to work with business to improve productivity, ease cost pressures and build business confidence to invest and create more jobs for the benefit of all Australians.”
There were over 240 respondents to the Australian Chamber-Westpac Survey of Industrial Trends from across the manufacturing sector.
The survey, the longest-running business survey in Australia, dating from 1966, provides a timely update on the manufacturing sector and insights into economy-wide trends.
The survey results are available on the Australian Chamber Website.
The Australian Chamber speaks for over 300,000 businesses employing millions of Australians in every sector of our economy and in every part of our country.