31.03.202622:04:33UTC+00Australian Industry Conditions Sharply Deteriorate: Ai Group

The Australian Industry Index plunged 19.9 points to -23.6 in March as the energy crisis took hold, recording the steepest monthly decline in the series and abruptly ending the recovery seen in 2026. Domestic demand weakened amid uncertainty stemming from the Middle East conflict, while rising fuel costs and renewed supply chain disruptions further dampened activity.

The employment index slumped to -28.7, its lowest level since May 2020, as softer conditions prompted firms to contemplate cutting hours, even as skills shortages persisted. New orders fell 21.7 points to -23.0, with shelved projects and deteriorating confidence constraining the pipeline. Input volumes also weakened, dropping 12.9 points into contraction.

Pricing pressures intensified. Input prices climbed to 8.5 as energy costs surged, while sales prices also increased as businesses attempted to pass through higher costs, though the widening gap between input and sales price indices signalled mounting margin strain.

Overall, economic activity remains under pressure. Capacity utilisation has fallen below its long-term average of 77%, to 82%.