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Manufacturers and exporters have reported a big slump in domestic sales, new survey results find.
The latest survey by the Manufacturers and Exporters Association shows a 15.3 per cent fall in May domestic sales, compared with the same month last year.
That was however offset partially by an 8.1 per cent increase in exports, resulting in a total May sales decline of 3.7 per cent.
The survey covers businesses with a total of $469 million in annualised sales, with an export content of 56 per cent.
It also found that net confidence had dropped tominus 40, down from minus 33 the previous month. Seventy per cent of respondents cited the state of the markets as the biggest constraint on growth.
Manufacturers and Exporters Association chief executive John Walley said comments from survey respondents indicate worries about the future.
"Sales are holding up now but there are few forward orders and confidence figures are reflecting that uncertain future. The rising cost of raw materials, energy and transport fuel are eating into profit margins ... "
Walley said businesses were reporting better returns on sales to Australia due to the improving exchange rate, but margins remain under pressure.
"The reduction of sales in the domestic sector reflects problems faced in the rest of the economy. Recent figures show a reduction in business borrowing, indicating that pressures previously seen in the tradeable sector have spread to the domestic sector."
The "thinning" of supply chains as more manufacturers move offshore was raising concerns over the cost and supply of materials.
