Australia’s manufacturing sector finished 2017 strong

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New South Wales CBD
People walk through the Central Business District on the first day of Autumn in Sydney March 1, 2004. Reuters/David Gray

Activity levels in Australia’s manufacturing sector continued to improve in December and ended 2017 on a strong note. All seven activity subindices saw improvement last month, according to the Ai Group’s Performance of Manufacturing Index.

At 56.2 for the last month of 2017 in seasonally adjusted terms, the reading suggests that activity levels continued to see improvements. It was a slightly slower pace compared to November at 57.3.

For 15 consecutive months, activity levels have either held steady or improved. It has been the longest continuous expansion since 2005. Participants, the Ai Group said, noted stronger production to fill long-standing orders following better business conditions throughout 2017.

Another positive headline result is that activity subindices improved. “Production, stocks (inventories) and supplier deliveries expanded at an accelerated pace while new orders, employment, exports and sales were slower, albeit still expanding in December,” the Ai Group said, according to Business Insider.

There were some participants that noted reduced export orders and/or sales last month. It was likely a response to the slower building activity and fluctuating Aussie dollar.

The Ai Group said the food and beverages sub-sector has seen its index rising to its highest level since April 2016. The “textiles, clothing, furniture and other” sub-sector remained in contraction last month. The wood and paper sub-sector moved into contraction. Markets were set to obtain separate reports on services and construction.

Meanwhile, in the retail sector, some of the country’s biggest retailers looked not prepared for new laws that could possibly be brought before parliament, which would require them to ensure that products are not made using slave labour. A joint federal parliament committee has called on the government to introduce a Modern Slavery Act as well as a mandatory supply chain reporting for huge companies.

Liberal MP for Dunkley Chris Crewther, the committee chair, said he was "quite confident" legislation would be introduced to parliament next year. He issued a warning that some companies were not doing enough to vet how goods were made. The committee also called for financial penalties for businesses that failed to act on proof of exploitation and those that did not comply. The government is expected to name and shame companies that failed to report after two years.

More than 40 million people across the world today were estimated to be victims of "modern slavery.” These include bonded labour, forced labour and human trafficking.

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