Call for stimulus amid manufacturing slump
Australian manufacturing activity has contracted in back-to-back months for the first time since 2015, sparking fresh calls for further economic stimulus.
The Australian Industry Group Performance of Manufacturing Index increased slightly by 0.2 points to 48.3 in December, but remains below the 50-point mark that separates expansion and contraction in activity, following a 3.1 point drop in October and a 3.5 point decline in November.
Ai Group Chief Executive Innes Willox said the year-ending downturn was a clear warning of the growing risk of a more broad-based slackening of an economy already in the slow lane.
"It adds weight to the view that serious consideration should be given to further fiscal stimulus," Mr Willox said.
The Reserve Bank cut the cash rate three times in 2019 to a record low 0.75 per cent and is widely tipped to go even lower when its board next meets in February.
The federal government was adamant at last month's budget update that it had done enough to stimulate the economy with a $9 billion cash injection through personal tax cuts, an acceleration of infrastructure projects and drought relief for framers.
The machinery, equipment and chemicals sectors remained broadly stable in December while other manufacturing sectors contracted.
Producers linked to construction and housing suffered from the entrenched slump as drought and adverse weather also took its toll.
The main bright spot were the food and beverages sector, which extended the upward trend recorded by the Australian PMI since 2012.
Back to Breaking News
Print this page