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[SYDNEY] A measure of Australian manufacturing activity edged higher in October with production, new orders and stocks all pointing to a mild expansion in conditions, while exports also improved partly due to a weaker local currency.
The Australian Industry Group's performance of manufacturing index (PMI) rose 2.9 points to 49.4 in October, just under the 50 level that marks the threshold between contraction and expansion. "The slide in manufacturing activity we have seen for the past couple of months has eased, with the sector broadly stable in October," said Innes Willox, AIG chief executive. "However, conditions remain patchy within the manufacturing sector with considerable differences between sub-sectors and with production and new orders lifting, whereas employment fell further during the month." Respondents to the survey said that, despite the steep drop in the Australian dollar since early September, it was still relatively high and import competition remained intense.
The local dollar slid over 6 per cent in September against its US counterpart and was last at US$0.8750.
The survey showed three of its five activity sub-indexes: production, new orders, and stocks were all above 50 points this month. Manufacturing exports also expanded mildly in October.
The employment sub-index, however, eased 1.5 points to 47.5 points. Its 6-month moving average suggested annual growth in the manufacturing employment trend is likely to remain slightly negative over the remainder of 2014.
The survey has been persistently weaker than official measures of manufacturing, implying the sector has been deep in recession for almost all of the past five years.