Australian Manufacturing Slumps Under Interest Rate Pressure

Manufacturers across the country are navigating a volatile start to the fourth quarter. Jingyi Pan, economics associate director at S&P Global Market Intelligence, notes that firms are battling a double whammy of worsening demand and severe supply constraints. This environment has triggered the sharpest decline in new orders in nearly two years, while port congestion and shipment delays have pushed delivery times to levels not seen since the pandemic.

Rising costs for fuel and raw materials are forcing firms to pass expenses to consumers, fueling further inflation. With the RBA’s cash rate poised to hit an 18-year high, the economic ripple effects are visible in the labor market. Companies have reduced staff for the second consecutive month, with the pace of job shedding—driven by both redundancies and voluntary departures—reaching a seven-month high. This decline in business activity coincides with a 40-year slump in house prices and softening consumer confidence, painting a grim picture for the national economy.