The Ai Group Australian Industry Index slumped further in March as the industry sees a fall in demand, while the manufacturing sector rebounded led by improvements in the chemicals and food & beverage sectors.
Falling to -6.1 points from 4.4, the latest industry index result indicates moderated contractionary conditions. The index has been in contraction territory since May 2022.
The new orders indicator dropped by a staggering 28.1 points to -19.8 in March — the largest single monthly fall in new orders on record, exceeding the April 2020 fall in the wake of lockdowns caused by the COVID-19 pandemic. Activity or sales remained in negative territory, while employment growth slowed.
The index reports on a -100 to 100 scale. Values below 0 indicate contraction, while scores above 0 indicate expansion.
Innes Willox, chief executive officer of Ai Group, said the result comes as the industry begins to reap the effects of a slowing Australian economy.
Businesses reported rapidly falling new orders in March, as uncertainty regarding the economic outlook begins to drag business planning.
Input and wage pressures on industry remain strong as inflation peaks in late 2022, according to Willox, adding that deteriorating demand conditions are “casting an ominous shadow over the months ahead.”
“Yesterday’s decision by the Reserve Bank Board to leave interest rates on hold provides welcome respite for households and businesses alike,” Willox added.
The Ai Group Australian Industry Index is a monthly analysis of the business activity in the Australian industry ecosystem.
The report includes the manufacturing, construction, engineering, technology, and business services sector, which account for approximately 36 per cent of the Australian economy.
