2 Mar 11

Manufacturing was back in growth territory in February with the seasonally adjusted Australian Industry Group-PwC Australian Performance of Manufacturing Index (Australian PMI®) rising 4.4 points to 51.1.

The improvement in the index follows five months of readings below the 50-point level separating expansion from contraction. The sub sectors of wood products & furniture; paper, printing & publishing; chemicals, petroleum & coal products; miscellaneous manufactures; and, to a smaller extent, construction materials sub-sectors, all expanded in February.

Ai Group Chief Executive, Heather Ridout, said: "The welcome lift in the manufacturing index was largely off the back of a substantial improvement in the new order sub-index and those sub-indexes related to restocking. This suggests a more encouraging immediate outlook for the sector. While only reflecting a single month's improvement, the result underlines the resilience of the sector in the face of extremely tough trading conditions and the impact of the strong dollar," Mrs Ridout said.

PwC Global Head of Industrial Manufacturing, Graeme Billings, said: "The improvement in activity in February is a positive sign for the manufacturing sector at a time of both structural and cyclical challenges. These challenges point to the need for further productivity enhancing measures to ensure the sector continues to be competitive in an ever changing environment," Mr Billings said.

Australian PMI® Key Findings for February:

• The seasonally adjusted Australian Industry Group-PwC Australian PMI® rose 4.4 points to 51.1 in February.
• Seven out of the 12 manufacturing sub-sectors recorded declines in activity in February, up from three sub-sectors in December. There were expansions in wood products & furniture; paper, printing & publishing; chemicals, petroleum & coal products; miscellaneous manufactures; and, to a smaller extent, construction materials sub-sectors in February.
• Seasonally adjusted, the production sub-index fell 1.0 points to 49.3, indicating manufacturing output declined, albeit slightly, in February.
• The new orders sub-index rose 7.2 points to 52.3, marking the first increase in new orders after five months of decline.
• The seasonally adjusted employment sub-index decreased 4.0 points in February to 45.0.
• Manufacturing inventories increased in February, with the seasonally adjusted sub-index up 13.2 points to 52.1.
• Manufacturing activity contracted in New South Wales and Victoria while all the other states recorded increases. Manufacturing activity picked up most strongly in Western Australia.