ELEANOR HALL: Australia's big manufacturers say tough conditions
are forcing them to make another wave of job cuts.
But Business reporter Pat McGrath reports that there are stronger signs elsewhere in the economy.
PAT MCGRATH: We'll have to wait until official figures are released next week to see whether the unemployment rate moved above 6.4 per cent in August.
But today's Performance of Manufacturing Index from the Australian Industry Group has given us a taste of what's to come.
Innes Willox is the group's chief executive.
INNES WILLOX: More people are being lost from the sector than are being gained and that's a sad reality.
And we've seen some quite big job losses in recent months through a range of companies and that flows through their supply chains, and that's perhaps what we're seeing now.
PAT MCGRATH: The monthly survey asks manufacturers about how their businesses are performing, and scores them on an index with a benchmark of 50.
A reading above 50 shows confidence is improving. Below 50 shows pessimism is on the rise.
In August, the figure dropped to 47.3.
INNES WILLOX: You hear anecdotally evidence of a lot of companies cutting back on the hours that they're working, the number of shifts, even down to four-day weeks. That's not completely uncommon.
So, while it's disappointing, it's not surprising.
And everything seems to point back to the dollar and the impact of the dollar, and that is allowing greater import competition to the market here.
PAT MCGRATH: That's despite August being the second month without the carbon price - a change the manufacturing industry had hoped would ease its costs
INNES WILLOX: Well it's early days, the tax has only just been repealed, so that will take a little while to flow through.
But we've had the situation where a lot of manufacturers right through the supply chain, a lot of industry has had to absorb the cost of the carbon tax in any case.
That hopefully flows through to allow them to perhaps make some investment or to make some hires.
PAT MCGRATH: Despite the gloomy picture, the Australian Industry Group is hopeful that continued strength in the housing industry will push up orders for manufacturers that produce construction materials.
And there's no sign of one aspect of the property industry slowing.
Figures out today from RP Data show capital city house prices have posted their strongest winter gains since 2007.
And RP Data senior research analyst Cameron Kusher says winter is a traditionally lacklustre season.
CAMERON KUSHER: If you look at some of the other indicators like auction clearance rates in particular, they've been very strong over the last three months.
So, clearly, we thought that perhaps the momentum in the market was slowing but today's data shows that's not the case.
PAT MCGRATH: Melbourne prices posted the strongest rises during
the quarter, lifting by 6.4 per cent.
In Sydney, prices jumped by 5 per cent during winter, and are now more than 16 per cent higher than a year ago.
Perth, Brisbane and Adelaide prices all increased by about 1 per cent during the past three months.
In Canberra they jumped by 2.4 per cent.
But Hobart and Darwin prices fell.
CAMERON KUSHER: From an investor's perspective, yields are actually fairly low both in Sydney and Melbourne, but I think it's just the attractiveness in investing into the two largest housing markets we have, and also those markets have seen the strongest level of capital growth at the moment.
And obviously the great unknown is just how much level of activity's coming from foreign buyers but you would have to think a foreign buyer is going attracted to a city that they know.
And I guess the two best-known cities in Australia are Sydney and Melbourne.
ELEANOR HALL: That's RP Data's senior research analyst Cameron Kusher, ending that report from our business reporter Pat McGrath.