Average Wages Diffusion Index (Point

Employment Increasing

70 70 65 65 60 60 55 55 50 50 45 45 40 40 35 35 30 30 25 25 20 20

70 65 60 55 50 45 40 35 30 25 20

Average Wages

70 65 60 55 50

Employment

45 40 35 30 25 20

June 08

Sept 08

Dec 08

Mar 09

June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

Dec 11

60 65

65

Mar12

60 55 55 50 50 45 45 40 40 35 35

Decreasing

60 Diffusion Index (Points) 55 50 45 40 35

Finished Stocks

Decreasing

Increasing

Employment Diffusion Index (Points

MArCH 2012
AuStrAlIAN PMI
MAR

30

Sep 10

Dec 09

Mar 10

Dec 10

Mar 11

Sep 11

Jun 10

Jun 11

Dec 11

Mar 12

MANufACturINg loSES grouNd IN MArCH

30
June 08 Sept 08 Dec 08 Mar 09 June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

Dec 11

Mar12

65 60

49.5

55 50 45 40 35

KEy fINdINgS

Manufacturing activity declined slightly in March after having

uSA ISM PMI

expanded for the previous three months. The seasonally adjusted Australian Industry Group-PwC Australian PMI fell 1.8 points to 49.5. (Readings below 50 indicate a contraction in 3 the distance from 50 indicative of the strength of activity with month moving average the decrease.) The decrease in manufacturing activity was largely due to significant contractions in the clothing and footwear and wood products and furniture sub-sectors. Survey respondents remained cautious about the outlook, citing softer demand, the strong Australian dollar, the impending carbon tax and import competition as some of the inhibitors of manufacturing activity. Wages and input costs continued to rise in March, while the decline in selling prices persisted, pointing to a further narrowing of manufacturing profit margins. New South Wales, Victoria and South Australia recorded contractions in manufacturing activity.
Deliveries Input

90
Increasing

80 Diffusion Index (Points) 70 60

Diffusion Index (Points)

60 55 50 45 40 35
Mar 09 Mar 10 June 08 Sept 08 June 09 Sept 09 June 10 Sept 10 Mar 11 Dec 08 Dec 09 Dec 10 June 11 Sept 11 Dec 11 Mar12 Decreasing Increasing

FEB

30

50 40 30 20

Decreasing

FEB

65 60 55 50 45 40 35

30 25 20

52.4

Mar 09

Mar 10

Mar 11

Mar 12

Jun 08

Sep 08

Dec 08

Jun 09

Sep 09

Dec 09

Jun 10

Sep 10

Dec 10

Jun 11

Sep 11

Dec 11

Increasing

60 55 50

Deliveries

Input Prices

Average Selling Prices

Australian PMI

3 month moving average

JAN

Diffusion Index (Points)

45 40
Decreasing

30

EurozoNE PMI

SECtorS
Seasonally adjusted, seven of the 12 manufacturing sub-sectors

Australian PMI
30 25
Food and beverages
Decreasing Increasing

35

FEB

65 60

Production Diffusion Index (Points)

Capacity Utilisation %

Transport equipment Miscellaneous TOTAL

Machinery and equipment

45 40 35 30 25 20

50

Capacity Utilisation %

30 25 25 20 20

70

JAPANESE PMI

35 35

Production

recorded decreases in activity in March, up from six in February. The clothing and footwear and wood products and furniture sub-sectors recorded significant contractions 80the month. The in textiles; chemicals, petroleum and coal products; basic metals; 70 65 fabricated metals; and miscellaneous manufactures sub-sectors 65 also experienced declines in activity, albeit at a slower pace. 60 60 55 The transport equipment and machinery and equipment 55 sub-sectors recorded significant increases in activity, benefiting 75 50 50 from strong demand from the mining sector. These increases 45 45 were, however, insufficient to lift overall activity in the 40 40 manufacturing sector.

49.0

55 50 45 40 35

20

Jun 08

Sep 08

Dec 08

Mar 09

Jun 09

Sep 09

Dec 09

Mar 10

Jun 10

Sep 10

Dec 10

Mar 11

Jun 11

Sep 11

Dec 11

Clothing and footwear Wood products and furniture Paper, printing and publishing

Mar 12

Textiles

EU

70 Chemicals, petroleum, coalAustralian PMI 65 Construction materials 60 55

3 month moving average 80

Capacity Utilisation Basic metals Fabricated metals 75

JAN

30

70

FEB
100

65 60

10

20

30

40

50

60

70

80

90

Diffusion Index

February 12

March 12 65

50.5

55 50 45 40 35

June 08

Sept 08

Dec 08

Mar 09

June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

Dec 11

ProduCtIoN ANd CAPACIty 65 65 utIlISAtIoN

70

65 60 55

70 65

Mar12

60

JA

80 Capacity Utilisation Capacity Utilisation % 75

New Orders

June 08

Sept 08

Dec 08

Mar 09

June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

28.5

Dec 11

35 20 30 25 20 15

Decreasing Mar12

20 20 33.0

35 30 24.0 25 19.5 20 15.0 15

40

25

CHINESE PMI

to 50.1, indicating that the level of manufacturing output was 50 broadly unchanged in March. 50 70 The result for manufacturing output reflected the significant 45 45 60.0 65 60 increases in production in the transport equipment and 40 40 55.5 60 machinery and equipment sub-sectors being largely offset by a 35 51.0 35 55 steep decline in production in the wood products and furniture 46.5 50 30 sub-sector. 42.0 45 25 25 37.5 Overall, capacity utilisation in March rose to 73.9%. 40
55

Diffusion Index (Points) Production Diffusion Index (Points)

60

Seasonally adjusted, the production sub-index fell 1.6 points

60 55
70

JAN

30

50
Increasing

June 10

June 11

Mar 10

Sept 10

Dec 10

Mar 11

Sept 11

Dec 11

Mar12

65 45 60 40 55 50 45

70

Production

FEB

65 60

35 30

65

49.6

55 50 45 40 35

60

June 08

Sept 08

Dec 08

Mar 09

June 09

Sept 09

Dec 09

Mar 10

June 10

Sept 10

Dec 10

Mar 11

June 11

Sept 11

Dec 11

Mar12

Supported by:

JULY JAN

30

asing

s)

70 65 55.5 60 51.0 55 75 75
60.0

70 65 60 55

www.markiteconomics.com

Increasing

Average Wages Diffusion Index (Points) Average Wages Diffusion Index (Points) Average Wages Diffusion Index Average Wages Diffusion Index (Points)(Points)

June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11 Mar12 Mar12 Mar12 Mar12

75 EMPloyMENt ANd AvErAgE WAgES 75 70 70 75 75 7565 The seasonally adjusted employment sub-index increased 75 65 75 7075 1.3 points to 51.3 in March, indicating that manufacturing 70 7060 70 60 70 6570 employment rose in the month after having remained flat 65 6555 65 55 65 6065 60 6050 60 50 60 5560 in February. 55 5545 55 45 55 5055 Significant increases in employment were recorded in the 50 5040 50 40 50 4550 transport equipment sub-sector, thanks to the lift in activity 45 4545 45 35 4045 provided by strong demand from mining businesses. 40 4035 40 40 40 30 30 35 35 3525 Employment in the food and beverages and wood products and 35 25 35 3035 furniture sub-sectors declined substantially. 30 3020 30 20 30 2530 25 2525 25 2025 20 2020 Wages growth in the manufacturing sector continued, 20 20 although at a slower pace than in the previous month, with the
Employment Employment Employment Employment

June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11 Mar12 Mar12 Mar12 Mar12

70 60.0 65 70 7055.5NEW ordErS 70 60 60.0 65 60.0 In seasonally adjusted terms, the new orders sub-index fell by 3.5 6551.0 60.0 65 55 points to 48.2 in March, failing to consolidate on the expansion 55.5 60 55.5 6046.5 55.5 60 50 51.0 55 51.0 5542.0 in new orders recorded in February following a period of decline 51.0 55 45 46.5 50 46.5 5037.5 in new orders since the middle of 2011. 46.5 50 40 42.0 45 42.0 Unadjusted, new orders increased in eight of the 12 sub-sectors. 4533.0 42.0 45 35 37.5 40 37.5 4028.5 The food and beverages; textiles; wood products and furniture; 37.5 40 30 33.0 35 33.0 3524.0 paper, printing and publishing; and miscellaneous manufactures 33.0 35 25 28.5 30 28.5 3019.5 sub-sectors recorded significant decreases in new orders. 28.5 30 20 24.0 25 24.0 2515.0 On the other hand, new orders increased significantly in the 24.0 25 15 19.5 20 19.5 2019.5 20 15.0 15 15.0 1515.0 construction materials and transport equipment sub-sectors. 15
New Orders New Orders New New Orders Orders

70 65 70 70 70 60 65 65 65 55 60 60 60 50 55 55 55 45 50 50 50 40 45 45 45 35 40 40 40 30 35 35 35 25 30 30 30 20 25 25 25 15 20 20 20 15 15 15

Increasing Increasing Increasing Increasing

Diffusion Index (Points) Diffusion Index (Points) Diffusion Index Diffusion Index (Points)(Points)

WHAt IS tHE AuStrAlIAN PMI?

The Australian Industry Group - PwC Australian Performance of Manufacturing Index (Australian PMI) is a seasonally adjusted national composite index based on the diffusion indices for production, new orders, deliveries, inventories and employment with varying weights. An Australian PMI reading above 50 points indicates that manufacturing is generally expanding; below 50, that it is declining. The distance from 50 is indicative of the strength of the expansion or decline. Survey results are based on a rotating sample of manufacturing companies eachmonth. More information can be obtained from the Ai Group website www.aigroup.com.au.

wages sub-index down 1.8 points to 55.2 in March.

70 75 75 65 75 70 70 60 70 65 65 55 65 60 60 50 60 55 55 45 55 50 50 40 50 45 45 35 45 40 40 30 40 35 35 25 35 30 30 20 30 25 25 25 20 20 20

Average Wages Average Wages Average Wages Average Wages

Employment Employment Employment Employment

70 75 75 65 75 70 70 60 70 65 65 55 65 60 60 50 60 55 55 45 55 50 50 40 50 45 45 35 45 40 40 30 40 35 35 25 35 30 30 20 30 25 25 25 20 20 20

Employment Diffusion Index (Points) Employment Diffusion Index (Points) Employment Diffusion Index Employment Diffusion Index (Points)(Points)

75

Decreasing Decreasing Decreasing Decreasing

75

SPoNSor StAtEMENt
PwC is delighted to be associated with the Survey of Australian Manufacturing and the Australian Industry Group. This association brings together the significant experience and expertise of Australias leading industry body and the largest business adviser to the manufacturing sector. We look forward to continuing our association with the Australian Industry Group and its members, and to playing our part in the ongoing development of Australian manufacturing.

60fINISHEd 65

StoCKS
Diffusion Index (Points) Diffusion Index (Points) Diffusion Index Diffusion Index (Points)(Points)

30 30 30

dElIvErIES, INPut CoStS ANd SEllINg PrICES

In seasonally adjusted terms, supplier deliveries decreased in

June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11 Mar12 Mar12 Mar12 Mar12

60 65 6060 6560 55 65 60 6055 55 5555 50 60 55 5550 50 55 5050 45 50 5045 50 45 4545 40 45 4540 45 40 4040 35 40 4035 40 35 3535 35 30 3535 30 3030

Finished Stocks Finished Stocks Finished Finished Stocks Stocks

seasonally adjusted sub-index rising 1.3 points to 52.4, above the 50-point level. Inventories increased most strongly in the textiles; transport equipment; and miscellaneous manufactures sub-sectors.

65 65 60 65 60 60 55 60 55 55 50 55 50 50 45 50 45 45 40 45 40 40 35 40 35 35 30 35

Decreasing Decreasing Decreasing Decreasing

Increasing Increasing Increasing Increasing

Manufacturing inventories increased in March, with the

65

50 50 40 50 40 40 30 40 30 30 20 30 20 20 20

June 08 June 08 June 08 June 08 Sept 08 Sept 08 Sept 08 Sept 08 Dec 08 Dec 08 Dec 08 Dec 08 Mar 09 Mar 09 Mar 09 Mar 09 June 09 June 09 June 09 June 09 Sept 09 Sept 09 Sept 09 Sept 09 Dec 09 Dec 09 Dec 09 Dec 09 Mar 10 Mar 10 Mar 10 Mar 10 June 10 June 10 June 10 June 10 Sept 10 Sept 10 Sept 10 Sept 10 Dec 10 Dec 10 Dec 10 Dec 10 Mar 11 Mar 11 Mar 11 Mar 11 June 11 June 11 June 11 June 11 Sept 11 Sept 11 Sept 11 Sept 11 Dec 11 Dec 11 Dec 11 Dec 11 Mar12 Mar12 Mar12 Mar12 Decreasing Decreasing Decreasing Decreasing

March, with the sub-index falling by 4.8 points to 47.0. Unadjusted, deliveries fell in seven sub-sectors, with clothing and footwear and wood products and furniture sub-sectors recording significant decreases. The increase in input costs moderated slightly in March, with the seasonally adjusted sub-index falling 0.2 points to 59.9. With the exception of the food and beverages sub-sectors, all other sub-sectors recorded increases in input costs. Selling prices decreased in March, with the selling prices sub-index falling 2.3 points to 45.9.
Deliveries Input Deliveries Input Deliveries Deliveries Input Input

90 90 90 80 90 80 80 70 80 70 70 60 70 60 60 50 60

CoNtACt
Increasing Increasing Increasing Increasing

Diffusion Index (Points) Diffusion Index (Points) Diffusion Index Diffusion Index (Points)(Points)

Innes Willox Chief Executive Designate Ai Group Tel 02 6233 0712

Markit Economics www.markiteconomics.com

Deliveries

Input Prices

Average Selling Prices

Deliveries Deliveries Deliveries

Input Prices Input Prices Input Prices

Average Selling Prices Average Selling Prices Average Selling Prices

AuStrAlIAN PMI
March 2012 AuStrAlIAN PMI 49.5 ProduCtIoN 50.1 EMPloyMENt 51.3 NEW ordErS 48.2 INvENtorIES 52.4 SuPPlIEr dElIvErIES 47.0 INPut PrICES 59.9 ExPortS 49.8 SEllINg PrICES 45.9 AvErAgE WAgES 55.2 CAPACIty utIlISAtIoN (%) 73.9

The Australian Industry Group, 2012 This publication is copyright. Apart from any fair dealing for the purposes of private study or research permitted under applicable copyright legislation, no part may be reproduced by any process or means without the prior written permission of The Australian Industry Group.

Disclaimer The Australian Industry Group provides information services to its members and others, which include economic and industry policy and forecasting services. None of the information provided here is represented or implied to be legal, accounting, financial or investment advice and does not constitute financial product advice. The Australian Industry Group does not invite and does not expect any person to act or rely on any statement, opinion, representation or interference expressed or implied in this publication. All readers must make their own enquiries and obtain their own professional advice in relation to any issue or matter referred to Transport equipment herein before making any financial or Transport equipment Transport equipment Miscellaneous other decision. The Australian Industry Machinery and equipment Machinery and equipment evaluation of the Australian PMI as well as Further Information Results are based on responses from over 200 companies from a rotating sample of manufacturers. An Machinery and equipment TOTAL Group accepts no responsibility for any Miscellaneous other economic research and analysis can be obtained from the Ai Group website on http://www.aigroup.com.au/economics. Miscellaneous Miscellaneous 0 10 20 30 40 50 60 70 80 90 act or omission by any person relying 100 Results for capacity utilisation, average wages and output prices to June 2007 based on quarterly surveys. From this point data will be collected in the monthly PMI survey. TOTAL TOTAL in whole or in part upon the contents TOTAL March ** Number of months moving in current direction. Diffusion 20 10 20Index 30 40 February 60 70 40 50 50 6012 70 80 80 9012 100 this publication. 90 100 of 0 0 10 30 New monthly seasonal adjustment factors derived directly from the Australian Bureau of Statistics were applied in April 2011. 0 10 20 30 40 50 60 70 80 90 100 AIG11317 February 12 March 12 Diffusion Index February 12 March 12 Diffusion Index Visit http://www.aigroup.com.au/economics for further economic analysis and information. February 12 March 12

February 2012 51.3 51.7 50.0 51.7 51.1 51.8 60.1 59.7 48.2 57.0 73.2

Monthly Change Direction Rate of Change Trend** (Months) Australian PMI -1.8 Contracting From expanding 1 Australian PMI Australian PMI -1.6 Australian PMI Expanding Slower 4 Increasing Decreasing 1.3 Expanding 1 Increasing Food and beverages From no change Decreasing Increasing Decreasing Increasing Decreasing -3.5 Contracting Textiles From expanding 1 Food and beverages Food and beverages Food and footwear Clothingand beverages 1.3 ExpandingTextiles Faster 5 Textiles Textiles Wood products and furniture Clothing and footwear -4.8 Paper, Clothing and footwear From expanding Contracting 1 Clothing and footwear printing and publishing Wood products and furniture products furniture -0.2 WoodChemicals,andand furniture Expanding coal Slower 118 Wood products petroleum, Paper, printing and publishing Paper, printing and publishing Construction materials -9.9 Paper, printing and publishing From expanding Contracting coal 1 Chemicals, petroleum, Chemicals, petroleum, coal Chemicals, petroleum, coal Basic -2.3 Contracting metals Faster 12 Construction materials Construction materials Construction materials Fabricated metals Basic Basic metals -1.8 Expanding metals Slower 35 TransportBasic metals equipment Fabricated metals Fabricated metals 0.7 pts Increase metals Fabricated Machinery and equipment

Diffusion Index