Australian manufacturing has expanded for a fourth consecutive month, but only marginally.

The latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) recorded 50.2 in October (readings above 50 indicate expansion in activity).

However, this represents a fall of 1.9 points over the previous month.

The result marked the longest run of expansionary readings since July 2010.

“A strong export performance in October helped manufacturing hold onto the gains made by the sector over the previous three months, clocking up the longest expansion in five years,” said Ai Group Chief Executive, Innes Willox.

While production lifted again, domestic sales and employment were lower and new orders were broadly unchanged.

Manufacturers continue to face strong competition and downward pricing pressures, despite the growing pressure on margins from more expensive imported goods.

The manufacturing selling prices sub-index increased by 1.3 points to 49.2, signaling a very mild contraction or stability at best.

Four of the eight manufacturing sub-sectors expanded: wood & paper products (down 5.5 points to 64.0); textiles, clothing, footwear, furniture & other manufacturing (up 0.5 points to 56.9); petroleum, coal, chemical & rubber products (up 0.3 points to 57.5); and, for the first time in five months, non-metallic mineral products (up 3.6 points to 52.6).  

Machinery and equipment was up 2.2 points to 45.0, metal products (up 1.4 points to 48.1), and very small printing & recorded media (down 0.9 points to 46.6).

Sub-sectors all remained in contraction, while food, beverages & tobacco was broadly stable (down 3.8 points to 49.7) after 16 months of expansion.

“The process of broadening the base of growth across the economy remains gradual and tentative,” said Mr Willox.

“There is clearly scope for stimulatory measures to boost domestic activity.” 

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