The Ai Group Industry Index for Australia’s manufacturing sector fell to -27.9 in March, its steepest monthly decline since April 2020. Overall manufacturing conditions remained weak, as subdued customer confidence and rising fuel and freight costs weighed on output. Inventory building provided only limited support.
The chemicals index rose to -18.1, with large projects lifting volumes despite higher energy costs and ongoing supply disruptions. By contrast, the minerals and metals index dropped to -30.2, reflecting softer export demand and shipping delays, although some businesses responded by bringing orders forward.
The machinery and equipment index improved to -26.2, supported by stronger orders for some producers, even as they faced intensified import competition and difficulties in sourcing materials. Food, beverages and TCF (textiles, clothing and footwear) recorded a sharp decline to -33.2, as higher interest rates and fuel costs dampened customer demand and pushed up operating expenses, compounded by competition from overseas suppliers.
Capacity utilisation fell to 73.7% amid these mounting pressures.