The economic outlook in Australia has led to a decrease in confidence among manufacturers. They are experiencing a decrease in new orders, as well as high costs for materials, energy, and labor. The worker shortage issue is also persisting. These unfavorable conditions have resulted in a drop in confidence levels that were last seen during the global financial crisis. According to a quarterly business survey, 32% of respondents anticipate a worsening business environment in the next six months. The manufacturing sector’s conditions are stagnant, with the composite index falling from 53.9 in the March quarter to 50.7 in the June quarter, according to Westpac chief economist Bill Evans. Firms are facing rising interest rates and demand downturn, while labor shortages and cost pressures linger. Manufacturers are still grappling with cost pressures, with 67% of firms reporting an increase in average unit costs. Although companies are passing these costs onto consumers, margins continue to shrink. Workforce shortages are still a concern, with firms struggling to find workers. New hiring has been affected by a slowdown in new orders, with both new orders and employment showing a decline in the June quarter. Stubborn inflation poses a threat to Australia’s economy, leading S&P Global to revise growth forecasts downward. The agency predicts a 1.4% expansion in 2023 and 1.2% in 2024. However, Treasurer Jim Chalmers and Opposition Leader Peter Dutton assure that while the economy will slow down significantly, a recession is not anticipated.