Industry marks one year of contraction

The Ai Group Australian Industry Index® (Aii) fell in April 2023, dropping 14.0 points to -20.1 points (seasonally adjusted). This indicates contractionary conditions. The index has been in contraction for the last 12 months.

Key findings for April 2023:

• Australian industry sank deeper into contraction in April on the back of falling demand and activity.
• April is the 12th consecutive month that the Australian Industry Index has indicated industrial contraction.
• Industrial activity/sales sunk deeply into contraction while the fall in new orders, which began in March, continued.
• Upwards pressures on prices continued to be strong despite inflation having peaked.
• All industrial subsectors are in contraction following declines in April. Manufacturing, chemicals, food & beverage and business services reported steep falls.
• Capacity utilisation grew marginally to 81.2%, reflecting ongoing labour and supply chain shortages.

Innes Willox, Chief Executive of the national employer association Ai Group said: "Australian industry marks a disappointing anniversary in April – 12 months of continuous contraction. Activity and sales have fallen into contraction as demand is weakening, a pattern now affecting every subsector within industry. Yet price pressures and shortages for supply chains and labour remain acute, trapping industry between supply constraints and falling demand. Yesterday's decision by the Reserve Bank to raise interest rates, while necessary to contain inflation, will add more pain to businesses facing a worsening economic outlook," Mr Willox said.

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About the Ai Group Australian Industry Index®
The Ai Group Australian Industry Index® is a monthly index that measures changes in activity in Australia’s industrial sectors. It provides diffusion indices which measure rates of changes in the level of industrial activity – expansion, stability, or contraction. A positive reading indicates the activity is expanding; negative indicates contraction. The distance from 0 indicates the strength of the expansion or decline.

The Australian Industry Index is based on monthly surveys from a national sample of Australian businesses. It uses ANZSIC industry codes for classifying sectors, and weights survey results using ABS data on gross value added by sector. Seasonal adjustment and trend calculations follow ABS methodology. For the detailed methodology, please visit https://www.aigroup.com.au/resourcecentre/research-economics/australian-industry-index/FAQs/

When referring to the Ai Group Australian Industry Index® the source should be attributed as “Australian Industry Group”.