A gauge of Australian manufacturing slumped to a four-year low in April as the sustained strength of the nation’s currency weighed on exporters.
The manufacturing index plunged 7.7 points to 36.7 last month, the Australian Industry Group said in a survey released today. The export index was the lowest since 2004, it showed.
The Australian dollar has averaged about $1.04 for the past two years, compared with around 75 cents in the prior decade, bankrupting manufacturers unable to compete with cheap imports. The central bank reduced its overnight cash-rate target by 1.75 percentage points between November 2011 and December 2012 to 3 percent as it seeks to revive industries including construction before a peak in the nation’s resource-investment boom.
“The sharp drop in manufacturing production, employment and new orders in April, along with the continued erosion of exports, is deeply concerning,” Innes Willox, AIG’s chief executive officer, said in a statement. “The strength of the Australian dollar is a major burden on domestic producers.”
A gauge of employment plunged 9.4 points to 39.3 in April, while new orders dropped 7 points to 32.4, the report showed. The production measure slumped 8.6 points to 33.1.
The manufacturing index’s reading on wages edged down 0.7 point to 57 last month, while inventories fell 4.8 points to 46.4, today’s report showed. Supplier deliveries slumped 7.3 points to 41.1, and selling prices dropped 2.7 points to 40.3, it showed.
The manufacturing survey, which is similar to the U.S. Institute for Supply Management-Chicago Inc.’s factory index, polled about 200 companies about production, new orders, deliveries, inventories and employment.