Manufacturing sector growth continues in July

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July PCI results preview Australia's manufacturing sector has shown growth for the thirteenth straight month. July PCI results preview

The Australian construction sector has continued to grow throughout July, with the Ai Group Australian Performance of Manufacturing Index (Australian PMI) showing expansion for the thirteenth straight month.

The index showed a reading of 56.4 points (readings above 50 indicate expansion), which now represents the longest phase of continuous expansion since August 2004.

 "Manufacturing activity entered its second year of expansion in July with the Australian PMI recording gains in manufacturing production, sales, exports and employment during the month," Ai Group chief executive Innes Willox says.

Six of the seven manufacturing activity sub-indexes measured showed expansion in July, with the employment sub-sector returning to growth after a period of decline.

Six of the eight manufacturing sub-sectors measured also showed expansion, led primarily by the ‘paper and wood’ sector at 59.6 points and the ‘printing and recorded media’ sector at 57.2 points. The ‘food, beverages and tobacco’ sector eased growth by one point but still remained in expansion at 52.7 points.

The Ai Group says the lower Australian dollar has contributed significantly to the recent expansion, but cautioned that further manufacturing investment is needed to maintain this level of activity.

"The lower value of the local currency has been a key driver behind these gains," Willox says.

"The strong lift in new orders augers well for the sector's immediate outlook and for a continuation of the role manufacturing is playing in the rebalancing of the broader economy,"

"However, the expansion over the past year has been only a partial recovery from the very serious slump in the years following the global financial crisis."

"Further substantial gains in manufacturing will require a lift in business investment both within the sector and across the broader economy."

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