Australian industries are recording the largest levels of production capacity since the COVID winter lockdowns in 2020.
The May Australian Industry Index (Aii), released today, shows that Capacity Utilisation had fallen to a record 73.5 percent.
The report, created by national employer association Ai Group, found utilisation had been trending down for the past year, but last month fell significantly from the range of 79-82 percent sustained for the past three years, to the lowest rate since mid-2020.
The report comes as the national accounts show real GDP grew by 0.1 percent in the March quarter and 1.1 percent annually.
Ai Group Chief Executive Innes Willox said this was the lowest rate of annual growth, aside from the pandemic, since the 1990s recession.
“Despite an economy that continues to slow, inflation remains worryingly persistent. With the Reserve Bank Governor reinforcing that it will do what it takes to reduce inflation, we face the worrying prospect of further interest rate rises while we are very close to having a shrinking economy,” Mr Willox said.
He said while household and government consumption spending was higher, business and public sector investment were both lower in March.
“Conditions are especially challenging for many branches of industry. The construction industry contracted by a significant 2.6 percent in the quarter, while the retail, wholesale, accommodation and food and information and telecommunications industries all shrank in real terms.”
Mr Willox said the May data revealed in the Aii suggested conditions for many businesses were unlikely to have improved since the March quarter.
“Our Australian Industry Index points to sharp falls in manufacturing and construction activity during May.
“Construction is facing particularly difficult circumstances with a raft of insolvencies presently afflicting the industry,” Mr Willox said.
The Aii, which measures changes in activity in Australia’s industrial sectors, showed a contraction in all indicators in May.
It found a significant decline in the new orders indicator around the holiday period was now passing through to the activity/sales and employment indicators.
