Manufacturing expansion continues in February


The manufacturing sector continued to expand last month, boosted by an increase in new orders, according to the latest industry data.

The latest Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) was 51.3 in February – only 0.3 down on the previous month (readings above 50 indicate an expansion in activity with the distance from 50 indicative of the strength of the increase).

Significant increases across the clothing and footwear and transport equipment sub-sectors together with a lift in new orders were leading contributors to the expansion.

While new orders picked up in the month (51.7), manufacturers remain cautious about the outlook citing softer demand, the strong Australian dollar, the impending carbon tax and import competition as factors affecting growth.

Australian Industry Group Chief Executive Designate, Innes Willox, said: "The tentative expansion in manufacturing activity that continued into February suggests that Australian manufacturing remains resilient in the face of the high dollar and difficult trading conditions. The movement of new orders into positive territory for the first time since the middle of 2011 is also encouraging. Nevertheless, conditions remain patchy and large sub-sectors including fabricated metals, chemicals and petroleum and construction materials are finding the current environment particularly difficult," Mr Willox said.

PwC Partner - Economics and Policy, Jeremy Thorpe, said: "Despite the announcement of recent high profile job cuts in manufacturing, employment remains flat in the February Australian PMI.

"We can expect the recent spate of announced job cuts in the manufacturing industry will lower the Australian PMI employment sub-index in coming months. The job reductions are a clear demonstration of the manufacturing industry’s focus on improving labour productivity," Mr Thorpe said.