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Manufacturing sector on the rise again

31-08-2010
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Manufacturing sector on the rise again

Activity in Australia's manufacturing sector has expanded for the first time for more than two years.

Helped by the lower Australian dollar and lower interest rates, manufacturing rose 5.3 points to 51.7 points in September, according to the Australian Industry Group (Ai Group).

This was the first month since June 2011 that the index was above 50, indicating activity in the sector is in expansion.

"The lift in manufacturing performance in September is very welcome news from a sector that has been under intense pressures from the strong dollar, high energy costs, uncompetitive unit labour costs and fragile demand in domestic and international markets, said Ai Group chief executive Innes Willox.

"There were encouraging indications from businesses that the easing in the dollar, low interest rates and the clear outcome of the federal election were lifting business sentiment," he said.

The expansion was fueled by strong rises in the sub-indexes for new orders and supplier deliveries, both of which moved well above 50 points. 

"The key question is whether these tentative pointers to future growth are confirmed by further gains in manufacturing performance over the next few months," Mr Willox said.

Expansion in activity was strongest in the food, beverages and tobacco sub-sector.

However, the metal products and machinery and equipment sub-sectors continued to show severe contraction.

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