Aus manufacturing expands for seventh straight month

The Australian manufacturing sector expanded again in in January though at a slower rate than the previous month, according to a key index.

The Australian Industry Group Australian Performance of Manufacturing Index (PMI) for January was 51.5, a slight drop from the December figure of 51.9. (Figures above 50 represent growth in the sector).

Four of the eight manufacturing sub-sectors expanded (that is, above 50 points in three-month moving averages), led by wood & paper products (unchanged at 64.3); petroleum, coal, chemical & rubber products (up 3.9 points to 59.1); and food, beverages and tobacco (up 4.9 points to 56.7). Textiles, clothing, furniture and other manufacturing was broadly stable (50.1 points).

The non-metallic mineral products sub-sector ended three months of expansion (down 6.4 points to 47.8), while machinery and equipment remained in contraction but is moving steadily towards stabilising with its best result since June 2014 (up 0.4 points to 47.6).

“The benefits of the lower dollar continue to accumulate with local manufacturers enjoying greater shares of the domestic market and increased export opportunities,” commented Ai Group Chief Executive, Innes Willox.

“The ongoing strength of new orders points to further growth in the months ahead, notwithstanding the contraction in business for automotive supply chains and the further decline in orders from the resources sector.

“While the overall growth is clearly encouraging, there is still a considerable way to go before manufacturing is contributing fully to the much-needed diversification of the domestic economy.”

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