While the manufacturing sector contracted to the lowest level since August 2016, food and beverage manufacturers bucked the trend with "ongoing reasonable growth", Australian Industry Group's latest Performance of Manufacturing Index has found.
The Index signalled an overall contraction in the sector, scoring 49.4 points. Food and beverage manufacturers remain the strongest in Australian manufacturing. Its PMI, scoring 60.6 points was followed by building materials, wood & furniture (up 1.2 points to 62.0). The metals products sector fell deeper into contraction (down 1.7 points to 40.8), as did the small but diverse textiles, clothing, footwear, paper and printing products sector (down 3.2 points to 44.1).
AI Group chief economist Julie Toth told Food & Drink Business the growth in food and beverage manufacturing is buoyed by continued support from large exports and the low Australian dollar.
“The food and beverage sector is the single largest component and makes up for twenty-seven per cent of total Australian manufacturing,” Toth said.
“The contraction in the manufacturing industry is mainly for machinery and equipment but we're finding the food and beverage industry is making these orders for equipment and supporting local sectors.”
Toth said the challenges facing the food and beverage industry mainly surround input costs, such as energy, electricity and raw materials, which are impacted by the lack of change in policy and the drought.
“We don't know when the impact of the drought for input prices will have an effect on food and beverage sector. This, along with policies particularly around energy, are the main factors that are sticking around for the industry to face.”
