Manufacturing Industry Slows Down in May, Judo Bank Reports

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A new report released by an Australian neobank discusses that the country’s manufacturing sector is still in a downturn but is welcomed by the Reserve Bank of Australia (RBA).

According to a report by Judo Bank, Australia’s manufacturing industry has continuously declined. Despite the PMI increasing by 0.4, it remains below the 50.0 contraction territory. This marks the third month-on-month decline in overall business conditions.

Warren Hogan, the chief economic advisor for Judo Bank, noted that this resulted from new orders remaining in contraction territory, which led to a lower production level mid-month of May. Hogan added, “This suggests that the sector is experiencing a normal cyclical slowdown with few signs of a more severe downturn typical of a recession in the broader economy.”

The chief advisor explained that this resulted from several factors affecting the sector. The report noted that tighter global monetary policies caused weaker demand, which meant that the production levels were reduced. This was also true for the local market.

Another factor that contributed to the lower production was the slower hiring activity of manufacturers, as many companies are trying to balance costs and, at the same time, manage the intensifying price pressures. This, in turn, increased costs across raw materials and transportation.

However, Hogan noted that this slowdown is precisely what the economic activity needs. According to the RBA, a downturn in economic activity may lower inflation to the 2% target.

The downward turn of the industry comes despite many improvements in the sector as manufacturers maintain a positive outlook and are capable of adapting to market uncertainties. Many players in the industry have focused their investments on tech advancements such as artificial intelligence and machine learning.Hon. Ed Husic MP, minister for Industry, Science and Technology, stated that the government is tirelessly working with different companies to propel the industry to a more advanced yet sustainable status. Husic added, “We are investing in the future of Australia’s hi-tech manufacturers, and I’m looking forward to seeing what they come up with.”

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