SYDNEY, Dec 1 (Reuters) - Australian manufacturing activity deteriorated markedly in November, the sixth straight month of contraction, and a tumble in new orders pointed to further weakness ahead, an industry survey showed on Monday.
The dismal result will only reinforce expectations for another sizable cut in interest rates when the Reserve bank of Australia (RBA) holds it monthly policy meeting on Tuesday.
The Australian Industry Group/PriceWaterhouseCoopers Performance of Manufacturing Index (PMI) sank a seasonally adjusted 7.7 points in November to 32.7. That was the lowest reading since the survey began in 1992 and far below the 50 threshold separating growth from contraction.
Firms reported an accelerating loss of consumer and business confidence, driven by worsening news on the global economy, falling household wealth, and a weak housing sector.
The survey's index of new orders, a leading indicator of demand, fell a steep 14.4 points in November to a lowly 24.5, again the lowest on record.
'Of particular concern is the alarming fall in new orders,' said Ai Group's chief executive Heather Ridout. 'This does not auger well and suggests a poor end to 2008 and an equally weak start to the new year.
Seeking to cut costs, businesses were laying off workers and the survey's measure of employment dropped 4.4 points to 33.2. The labour market has been resilient up to now but analysts suspect the unemployment rate is set to rise steadily in coming months.
'Clearly the result reinforces the need for a significant cut in interest rates when the Reserve Bank meets tomorrow,' said Ridout.
The central bank has already slashed its cash rate by 2 percentage points to 5.25 percent and analysts look for at least another 75 basis points of easing on Tuesday.
The survey of 500 companies showed activity declined in all 12 sectors covered, from food to construction to transport.
The survey's measure of production sank 11.1 points in November to 30.4, while capacity utilisation dropped to 71.4 percent, from 72.7 percent the month before.
Inventories eased moderately, while exports fell sharply in line with a decline in global manufactures trade.
(Reporting by Wayne Cole; Editing by James Thornhill) Keywords: AUSTRALIA ECONOMY/MANUFACTURING (wayne.cole@reuters.com ; +61 2 9373 1813; Reuters Messaging: wayne.cole.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The dismal result will only reinforce expectations for another sizable cut in interest rates when the Reserve bank of Australia (RBA) holds it monthly policy meeting on Tuesday.
The Australian Industry Group/PriceWaterhouseCoopers Performance of Manufacturing Index (PMI) sank a seasonally adjusted 7.7 points in November to 32.7. That was the lowest reading since the survey began in 1992 and far below the 50 threshold separating growth from contraction.
Firms reported an accelerating loss of consumer and business confidence, driven by worsening news on the global economy, falling household wealth, and a weak housing sector.
The survey's index of new orders, a leading indicator of demand, fell a steep 14.4 points in November to a lowly 24.5, again the lowest on record.
'Of particular concern is the alarming fall in new orders,' said Ai Group's chief executive Heather Ridout. 'This does not auger well and suggests a poor end to 2008 and an equally weak start to the new year.
Seeking to cut costs, businesses were laying off workers and the survey's measure of employment dropped 4.4 points to 33.2. The labour market has been resilient up to now but analysts suspect the unemployment rate is set to rise steadily in coming months.
'Clearly the result reinforces the need for a significant cut in interest rates when the Reserve Bank meets tomorrow,' said Ridout.
The central bank has already slashed its cash rate by 2 percentage points to 5.25 percent and analysts look for at least another 75 basis points of easing on Tuesday.
The survey of 500 companies showed activity declined in all 12 sectors covered, from food to construction to transport.
The survey's measure of production sank 11.1 points in November to 30.4, while capacity utilisation dropped to 71.4 percent, from 72.7 percent the month before.
Inventories eased moderately, while exports fell sharply in line with a decline in global manufactures trade.
(Reporting by Wayne Cole; Editing by James Thornhill) Keywords: AUSTRALIA ECONOMY/MANUFACTURING (wayne.cole@reuters.com ; +61 2 9373 1813; Reuters Messaging: wayne.cole.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.