DISRUPTION to national supply chains, firstly from bushfires and then from coronavirus, is hurting the national manufacturing sector, the Australia Chamber of Commerce and Industry says.

The latest Australian Chamber-Westpac Survey of Industrial Trends found business conditions in the manufacturing sector were hit by the largest single quarter decline in 20 years.

The survey, done between February 10 and March 3, found the Actual Composite index fell to 45.0 in the March quarter, from 56.1 in December and down from 61.7 during the same period in 2019.

“The survey shows a steady decrease in business conditions and confidence because of uncertainty around the impact of the coronavirus,” ACCI chief executive James Pearson said.

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“A number of key markers are down, including employment conditions. While the Federal Government’s initial economic stimulus package will go some way to restoring confidence in the manufacturing industry, we need to deal with supply chain disruptions that manufacturers are particularly exposed to.

“Further stimulus would help support SMEs and jobs at risk. We urgently need both sector-specific and economy-wide measures, including help for the stricken tourism, events and hospitality industries; bringing forward the personal income tax cuts and business tax cuts that have already been passed by the Parliament, and further measures to support businesses to keep people in jobs.”

Westpac senior economist Andrew Hanlan said the softer reading on actual conditions was evident across all the sub-components.

“The weak start to the year is largely a product of transitory disruptions to demand and the supply chain, including the bushfires, the drought and the COVID-19 outbreak, as well as the ongoing downturn in home building,” Mr Hanlan said.

“The export uptrend being enjoyed by the manufacturing sector has been interrupted in 2020 as global trade is impacted by COVID-19.

“Respondents indicated that exports were broadly flat in March and anticipated a decline in June. “Helping to cushion the impact, the Australian dollar has weakened sharply, providing a boost to the competitiveness of exporters and import competing firms.”

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