Manufacturing in Australia is Slowing
Business conditions in manufacturing fell sharply in the June quarter, reversing a spritely first three months of the year.
The Westpac-Australian Chamber of Commerce and Industry industrial trends survey for the June quarter showed that expectations for the September quarter fell sharply.
The survey, which closed on June 3, took place against a backdrop of slowing global growth, further confirmation that the mining sector is set to embark on an investment boom, a cautious household sector, unchanged interest rates and an Australian dollar close to its post-float high.
Further reports suggest that as the Asian economy grows, Australia will benefit (generally speaking), however [again] Manufacturing won’t benefit the same as other sectors…
It is believed that in the ensuing years all [broad] sectors are expected to grow as ‘boom’ conditions run on, growing as per the following:-
- Mining by 65%,
- Construction by 48%
- Services by 35%
…however Manufacturing output is only expected to grow by 6%...
As a result of these projections, it is understood that whilst employment will grow in most other sectors, employment manufacturing will potentially reduce by 17% (or approx 170,000 jobs), thus adding to the long, slow decline of manufacturing.
If you look at the employment figures in the last decade, manufacturing in Australia employed more than 1.08 million people (or 12% of the total number of jobs). Today it has shrunk to approx 990,000 (or 8% of the total number of jobs). Forecasts suggest that manufacturing employment is set to [continue] to reduce over the ensuing 10 years.
Some reasons given for the reduction in manufacturing includes the impacts resources boom has on the Australian economy in addition to the current exchange rate (of the AUD) and our exceptional prosperity (at present).
Government reports, supporting the above, suggest that as a result of ‘Global Activity’ a high demand for our commodities will result. This activity is prominent in Asia!
There are stories about manufacturing businesses that are feeling the pinch especially as importers are ‘reaping the benefits’ of the high Australian Dollar…and contracts usually secured by local business are being lost to competitors (new to the sector).
There are arguments that the Federal Government’s proposed ‘Carbon Tax’ will impact upon the manufacturing sector, and most likely this debate will continue for some time. Notwithstanding, the Government included in its Budget a plan for improving the training and the skills of the workforce, which is designed to help with then restructuring and rebuilding that is ahead.