Victoria to feel the Manufacturing Heat

23 Aug 11

Victoria, traditionally Australia's manufacturing capital is feeling the heat of a slowdown in the manufacturing sector as the strong dollar and government complacency takes an increasing toll on the non-resource economy.

Press reports this morning indicate that unemployment is expected to rise sharply nationwide with Victoria tipped to be the hardest hit as the global economy continues to slow, piling more pressure on already weak manufacturing, retail and construction sectors.

Analysts believe that Bluescope's move to axe 1000 full time jobs yesterday, including 200 at the Hastings Western Port mill, will not be the last major redundancy campaign announced by manufacturers.

Victoria's manufacturing sector employs over 300,000 workers and tipped to be hit hard as a result of Australia's two-speed economy.

Economists believe the unemployment rate will inevitably rise to 6 per cent as job growth slows unless the government and the Reserve Bank step in to stimulate the economy.

ANZ economist Ivan Colhoun has indicated that the latest jobs data showed the economy was only creating about 3,000 new jobs a month which is well below the 10,000 needed to stop unemployment rising.

Is the timing right for a toxic tax on carbon which will only exacerbate the situation?