Manufacturing exports strong on back of lower dollar

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  • Plant & Equipment

A lift in exports gave the Australian manufacturing sector some good news in May by helping activity expand for the first time in six months, according to the Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI).

Manufacturing exports strong on back of lower dollar
The food and beverage sector was particularly strong in May.

The overall index rose 4.3 points to 52.3 — with readings above or below 50 indicating an expansion or contraction of activity — with five of the seven activity sub-indexes also showing strength.

Ai Group says the growth of manufacturing exports by 10.9 points to 58.3 primarily reflected the benefits of the lower Australian dollar, particularly in the food and beverages sub-sector, which rose 4.6 points to 59.8.

"The flow of benefits for domestic producers from the lower Australian dollar is picking up as exports recover some of the ground lost in recent years," Ai Group CEO Innes Willox says.

"This was a clear positive for performance in May, together with strong residential construction activity and very low interest rates, and helped propel the sector into expansionary territory for the first time in six months.

"There remains a fine balance, however, and the rapid decline in mining construction, the progressive closure of automotive assembly and subdued local business investment in machinery and equipment continues to weigh on local demand."

The other manufacturing sub-sectors to grow in May were: printing and recorded media (up 0.7 points to 62.2); wood & paper products (up 4.0 points to 59.3) and, for the first time in a year, petroleum, coal, chemicals and rubber products (up 12.4 points to 51.8). Non-metallic mineral products posted a positive 50.2 reading, but the rate of growth declined by 4.3 points.

Continuing to contract were: machinery and equipment (down 2.8 points to 43.2); metal products (down 2.0 points to 40.4); and textiles, clothing and furniture (up 2.2 points to 46.6).

Employment was broadly stable (up 1.7 points to 50.9) after four months of contraction.


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