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Falling Aussie Dollars Boost Domestic Manufacturers in Australia

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Published on : Aug 03, 2015

July brought a good news for the manufacturing sector in Australia. The index gauging the industry performance in the country revealed recovery in Australia’s manufacturing sector in July, with sales registering an increase for the first time in more than a year. 

Compared to 50.4 mark last month, the Australian Industry Group’s Performance of Manufacturing Index or PMI rose by 6.2%. This records a positive rise from the 50-point level distinguishing expansion from contraction. 

Peter Burn, who is head of policy in the Australian Industry Group said confirmed that the country has witnessed impressive recovery in manufacturing sales last month. The rise in index indicated increase in domestic manufacturing sale in particular, which the country hadn’t registered in quite some time. 

The strengthening value in comparison to dollar is significantly helping the manufacturing industry of Australia, which is expected to help domestic producers more if it falls a bit further than expected. However, Burn also expressed that it might take a few more months for Australian dollar to convince several firms that it is safe all over again to invest in expansion. 

He also said that Australia needs a significantly increased investment in the manufacturing industry as much as it does in other segments of the economy. 

While manufacturers in Australia are benefitting from lower dollar, which is partly contributed by the economic slowdown in China, local resource companies are likely to embrace even lower demand as the key manufacturing index in China hits two-year low. 

The final reading of Markit and Caixin’s Purchasing Manager’s Index (PMI) shows a steeper slump in Chinese manufacturing than preliminary readings. According to experts, the slowdown in the manufacturing industry in China will negatively impact the mining companies in Australia. However, lower Aussie dollar is expected to boost operations of domestic manufacturers in the country.