Wednesday, October 27, 2021

Manufacturing sector stalled due to lockdown

Australia’s manufacturing sector was barely growing in September as border closures and coronavirus lockdowns kept activity going, although the industry is hoping for a rebound in the coming months as restrictions are eased.

The performance of the Australian Industry Group’s manufacturing index fell 0.4 points to 51.2, just above the 50 level, which distinguishes growth in the sector from contraction.

AI Group Chief Executive Officer Ines Willox said the lockdown in the country’s two largest states, NSW and Victoria, has stalled a solid recovery since the end of 2020.

“While sales and employment were both down in September, there are bright spots on the horizon, with new orders continuing to expand and both production and finished stock growing at a faster pace than in August,” Mr Willox said.

“Manufacturers are expecting that the return of restrictions will likely see a strong uptick in performance in the coming months.”

Meanwhile, economists expect the boom in home prices to show more signs of a boil when September figures are released later on Friday as the affordability crunch begins to ease.

The well-regarded CoreLogic Home Value Index for September is due out on Friday, which economists expect will lead to a further increase of at least one percent, but less than the monthly growth seen earlier in the year.

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In August, home prices were rising at their fastest annual pace since 1989.

The Australian Bureau of Statistics will also release its lending figures for August, which economists expect will see a slight decline of around two per cent, following recent heavy demand for mortgages.

Rising home prices and strong demand for home loans in a low-interest environment have started to haunt Australia’s financial regulators, although they say lending standards are strong at this stage.

Regulators this week – the Reserve Bank of Australia, the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission and the Treasury – warned that they are looking to take the heat out of the housing market through macroprudential measures.

APRA plans to publish an information paper soon on its framework for implementing such policies.

The RBA has repeatedly said that it will not use interest rates to cool the housing market.



This News Originally From – The Epoch Times

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