The manufacturing industry is showing promising signs of recovery, with recent research indicating a potential turnaround in the sector’s fortunes.
Earlier this month, figures from the Australian Industry Group Performance of Manufacturing Index (PMI) revealed exports as the primary driver of improvements. The index increased 4.3 points in May, climbing to 52.3 – any score above 50 indicates growth.
The latest Australian Chamber of Commerce and Industry (ACCI) and Westpac Survey of Industrial Trends offered similar findings. The index jumped 2.2 points to 58.4 points in the three-month period to June, its third consecutive rise.
A net 11 per cent of manufacturers now expect to increase investment on equipment over the next 12 months. The ACCI said this could represent a turning point for the industry, with fewer organisations looking to tighten the purse strings.
The news may encourage manufacturing businesses to reassess their current spending and focus more on expansion opportunities. However, purchasing additional equipment and resources may require organisations to review their manufacturers insurance.
With the sector poised for growth in the coming months, it’s crucial that manufacturers have sufficient coverage in place to protect against any unforeseen problems.
Andrew Hanlan, senior economist at Westpac, said industrial production is experiencing a resurgence, but he noted several issues creating caution among businesses.
“Despite the improvement evident late in 2014 and early in 2015, the current cycle remains constrained by a number of headwinds,” he explained. “Consumer spending is below trend, mining investment is turning down sharply and global fragilities persist.”
Nevertheless, Mr Hanlan emphasised optimism was high among manufacturers due to an increase in new orders and productivity. Strong exports look set to continue bolstering confidence in the industry.