Manufacturing activity improved significantly in May, but still remains in negative territory.
The latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI) seasonally adjusted index rose 4.4 points to 49.2 to remain just below the 50 point expansion level.
There was a rise in manufacturing production and new orders in the month, despite a dampening in confidence following the Federal Budget.
Those sub-indexes improved to 51.6 points and 55.1 points respectively.
Manufacturing sales, a newly added sub-series, recorded 53.7 points in May.
Manufacturing employment contracted further in May, as did supplier deliveries, inventories and exports.
Australian Industry Group Chief Executive, Innes Willox, said: “The manufacturing sector continues to be buffeted by weak household demand, a lack of business confidence and fierce competition in both domestic and export markets heightened by the renewed strength in the Australian dollar.
“While there was an encouraging rebound in new orders after a particularly weak April, the public reaction to the Federal Budget appears to be weighing negatively on consumer sentiment and business confidence.
“The ongoing uncertainty over a number of budget measures is adding another layer of concern for local manufacturers.”