Australian industry sank further into contraction in March on the back of falling demand, according to Ai Group’s Industry Index, which was down another 4.4 points to -6.1 points, with new orders down 28 points. Resisting the trend, Manufacturing rebounded in March, led by a recovery in the chemicals and food & beverage sectors.
"Uncertainty": Innes Willox, CEO Ai Group“Industry is beginning to feel the effects of a slowing Australian economy,” said Innes Willox, Ai Group chief executive. “Business reported rapidly falling new orders in March, as uncertainty regarding the economic outlook begins to weigh on business planning.
“Inflation appears to have peaked in late 2022, but input and wage pressures on industry remain strong. While industry reports easing supply chain and energy cost pressures, deteriorating demand conditions are casting an ominous shadow over the months ahead.
“[Last week’s] decision by the Reserve Bank Board to leave interest rates on hold provides welcome respite for households and businesses alike,” Willox said.
Key findings for March 2023:
Australian industry slipped further into contraction in March on the back of falling demand.
The new orders indicator collapsed by 28.1 points to -19.8. This is the largest single monthly fall in new orders on record for the Aii, exceeding the April 2020 fall caused by covid shutdowns.
Activity/sales remained in negative territory, while employment growth slowed. Price pressures eased, but all price indicators remain in significant expansion.
Manufacturing rebounded in March, led by a recovery in the chemicals and food & beverage sectors. Construction remained in mild contraction and business services fell into steep contraction.
Capacity utilisation eased to 79.6% but remains above its post-pandemic average (78.9%).
The Ai Group Australian Industry Index is a monthly analysis of business activity that includes the manufacturing, construction, engineering, technology, and business services sectors, which account for about 36 per cent of the Australian economy.
