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Manufacturing sector expands for first time in 6 months

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The Australian level of manufacturing exports has seen its first rise since in November 2014, according to the latest readings from the Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®).

The Australian PMI® hit 52.3 in May, a rise of 4.3 points. The Australian Industry Group (Ai Group) says that a reading above 50 points to “an expansion in activity, with the distance from 50 indicative of the strength of the increase”.

The lower Australian dollar was cited as a factor behind the rise in manufacturing exports, which jumped 10.9 points to 58.3 in May. While new orders and production sub-indexes both saw climbs, to 52.8 and 52.9 respectively, manufacturing sales dropped for the 12th month, hitting 47.9.

Of the eight manufacturing sub-sectors, five registered an expansion during the month of May. Food, beverages & tobacco rose by 4.6 points to 59.8; printing & recorded media rose 0.7 points to 62.2; wood & paper products jumped 4.0 points to 59.3; and petroleum, coal, chemicals & rubber products went up 12.4 points to 51.8 – the first time in the past 12 months.

“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 Chief Executive, Innes Willox, said in a statement.

“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.”

Mr Willox said local demand continues to be affected by the rapid decline seen in mining construction, the closure of automotive assembly and the poor numbers seen in local business investment in machinery and equipment.

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