The manufacturing sector picked up slightly in October, but still remains in negative territory.
The latest seasonally adjusted Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) contracted during the month, but at a slower rate than recent months, rising 5.1 points to 47.4.
The decline was particularly pronounced across the clothing and footwear sub-sector and sub-sectors linked to the construction industry.
Manufacturers cited a combination of slowing sales, the strong Australian dollar, cheap imports and weak housing and commercial construction as affecting activity. Skills shortages were also cited as a barrier to growth.
Australian Industry Group Chief Executive, Heather Ridout, said: "While it is encouraging that the pace of the decline in manufacturing activity eased in October, the sector remained in negative territory. New orders remained soft suggesting that there are no real signs of a substantial, near term pick up in the sector."
PwC Australian Head of Industrial Products, Graeme Billings, said: "The easing in the contraction in manufacturing activity in October is encouraging, but the sector continues to face challenging business conditions.
“Manufacturers need to continue to invest in productivity in order to lift competitiveness, a key determinant for the long term outlook for the sector.”