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Soaring export sales have helped manufacturers to offset a marked fall in domestic demand, latest indicators show.
Results from the Manufacturers and Exporters Association's survey of business conditions show total sales for June increased by 3.8 per cent compared with June last year. A 39.6 per cent increase in export sales kept the overall sales figures in black, despite a fall in domestic sales of 14.7 per cent.
Net confidence slipped further to minus 55, down from the minus 40 result reported in May.
The current performance index, which measures profitability and cashflow, is at 93, down from the previous month's 100, while the forecast index, which measures investment, sales, profitability and staffing, is at 98, down on the previous month's 101.
Anything less than 100 indicates a contraction.
The survey sample covered businesses with a total of $566 million in annualised sales, with an export content of 46 per cent.
Association chief executive John Walley said respondents all talked of a slowdown.
"Across the board rising costs are eating away at margins. The low returns, a lower backlog of forward orders, slow payment, and an all-round nervousness about cashflow have seen confidence drop further.
"For the first time in some years all three composite indicators are in contraction territory and future indications are all negative."
Walley, however, pointed out that the Reserve Bank's cut to the official cash rate, and the fall of the US dollar, occurred after the survey's close.
"A more realistic exchange rate should herald some improvement in returns once any higher forward cover works through. Demand will be the constraint, as markets indicate a reducing tolerance to risk, and consumers tighten their belts."
