Positive signs for manufacturing sector

Manufacturing activity remained in positive territory in January, according to the latest industry data.

The Australian Industry Group – PwC Australian Performance of Manufacturing Index (Australian PMI) expanded slightly in the month, up 1.4 points to 51.6 (readings above 50 indicate an expansion in activity).

The lift in the overall index to 51.6 was largely due to a rise in the delivery of inputs (55.6) and a rise in inventories of finished goods (54.3) while production (50.7) and new orders (49.9) were broadly unchanged. Across the sub-sectors food and beverages registered the strongest performance (73.8). Textiles recorded the weakest result (37.7) while those sub-sectors linked to construction also performed poorly.

"Encouragingly, manufacturing held on to positive territory in January to register the second consecutive month of growth, albeit by a slim margin, said Australian Industry Group Chief Executive, Heather Ridout.

“The growth was underpinned by expansion in key sub-sectors such as food and beverages and transport equipment, Ms Ridout said. “At the same time, six of the 12 manufacturing sub-sectors contracted in January highlighting the tough conditions persisting in the sector.”  

Respondents cited ongoing global economic uncertainty and strong overseas competition as factors inhibiting growth.