Drought, bushfires and coronavirus lead to summer slump

Although the food and beverage industry remains strong, Ai Group has published an aggregate Australian Performance of Business Index (Australian PBI) that shows a deteriorating level of business conditions and activity overall. The Australian PBI fell by 3.9 points to 47.4 in December 2019, before falling by 0.8 points to 46.6 points in January 2020. Results below 50 points in the Australian PBI indicate deteriorating business conditions, with lower numbers indicating a faster pace of deterioration.

Bucking the trend, the ‘food and beverage products’ industry index remains well above 50, which indicates expansion. The December index was 60.8 points, followed by 60.3 points in Janurary 2020 — slightly lower but still in the blue.

“The January result reflects an underlying sluggishness in local business activity, exacerbated by a summer marred by widespread drought, bushfires and the initial impacts of the coronavirus. All four of the activity indexes included in the Australian PBI indicated contractions in January. Current production declined at about the same rate as in December. The employment index dropped into contraction for the first time since July. The more forward-looking indicators in the Australian PBI — new orders and supplier deliveries — both showed substantial declines in December and January, albeit at a moderating pace in January,” said Innes Wilcox, Ai Group Chief Executive.

The Australian PBI is a weighted aggregate of Ai Group’s Australian Performance of Manufacturing Index (Australian PMI), Performance of Services Index (Australian PSI) and Performance of Construction Index (Australian PCI).

The full report is available here.

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