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Food and beverage bucks manufacturing industry’s downward trend

The Australian manufacturing industry has had a disappointing start to 2020, with the index recording a third consecutive monthly contraction, according to the Australian Industry Group.

The Performance of Manufacturing Index (PMI) dropped 2.9 points to 45.4 in January, the lowest monthly result since 2015, with food and beverages the only sector to report expanding conditions.

Many manufacturers were closed during the worst of the bushfires in early January, but many of those that were open reported a drop in sales as a result.

“The combined impact of global trade disruptions, slow local consumption, the residential construction downturn, drought and the ongoing bushfire crisis are taking their toll on local production this summer,” Ai Group Chief Executive Innes Willox said.

“Drought and fire continue to disrupt activity, reduce demand and push up prices for key inputs for food processors and other manufacturing sectors.”

Willox also warned that the coronavirus poses a great threat of global disruption and disaster.

“China and its Asian neighbours are key export markets for Australian food, beverages and other manufactured goods. The measures announced in response to the virus to date are timely and necessary, but they will likely dent demand for Australian manufactured exports in the short term,” he said.

Willox is confident that the “resilience and flexibility of Australian manufacturers” will help them to bounce back quickly once trading conditions return to normal.

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