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INDUSTRY NEWS<br />
Left: Demand for machinery helped lift Australian<br />
manufacturing in July. Image courtesy Alamy<br />
demand boosts<br />
manufacturing<br />
JobKeeper and instant<br />
asset write-offs help<br />
buoy machinery<br />
and equipment<br />
manufacturing – with<br />
particular demand for<br />
transport and agricultural<br />
equipment<br />
Higher demand for machinery and equipment has boosted<br />
Australian manufacturing in July, according to new<br />
information released by the Australian Industry Group (Ai Group).<br />
Following a rise in June, the Group’s Australian Performance of<br />
Manufacturing Index (Australian PMI) rose again by 2.0 points to<br />
53.5 in July – the first two-month rise since October last year.<br />
PMI readings above 50 points indicate an expansion in activity,<br />
with higher results indicating a faster rate of expansion.<br />
The data showed the rise was led by the machinery and<br />
equipment sector – which covers everything from transport<br />
goods and professional and scientific equipment to pumps,<br />
compressors and domestic appliances – which was up 3.2<br />
points to 54.3 points.<br />
However, this was not enough to push the sector’s long-run<br />
average (calculated over 13 months) into positive territory, sitting<br />
at 49.6, compared to the PMI trend of 50.4.<br />
Australian machinery and equipment manufacturers produced<br />
$20.5 billion in real value-added output in the year to the first<br />
quarter of 2020, employing about 179,000 people, or 20 per cent<br />
of all Australian manufacturing workers.<br />
Ai Group chief executive Innes Willox says a number of factors<br />
are behind the rise.<br />
“The performance of the sector was in part due to stimulus<br />
measures including JobKeeper and the extension of the instant<br />
asset write-off arrangements which boosted sales and orders in<br />
the machinery and equipment sector,” he says.<br />
“Against the positive signs from the manufacturing sector, the<br />
winding down of stimulus from September, the impact of the<br />
Melbourne lockdown and the severity of the outbreak, as well as<br />
tougher border restrictions are likely to weigh on the sector in<br />
coming months.<br />
“Manufacturing employment, production and new orders were<br />
all higher than in June, although the pace of improvement in<br />
new orders slowed over the month. Unfortunately, exports were<br />
again weaker in July,” he says.<br />
Despite the success of the machinery and equipment and food<br />
and beverage (up 1.9 points to 59.4) sectors, they were the only<br />
manufacturing groups to grow – with the other four contracting<br />
in July, due to weakness in the construction sector and the<br />
impacts of COVID-19.<br />
However, manufacturers across the board did notice increased<br />
interest in locally-made manufactured goods, amid rising new<br />
orders for transport and agricultural machinery and equipment,<br />
Ai Group says.<br />
Australian PMI results are based on responses from a national<br />
sample of manufacturers that includes all states and all subsectors.<br />
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