Australian industry climbed 1.5 points on the Price Waterhouse Coopers performance of manufacturing index (PMI) in July due to stronger levels of production, new orders and deliveries.
This is the seventh consecutive month of upward movement. The strong result suggests the Australian economy is performing well. A figure above 50 shows the industry is expanding.
According to Price Waterhouse Coopers Global Head of Industrial Manufacturing, Graeme Billings, manufacturers were continuing to recover although they need to keep investing, innovating and upgrading the skills of their workforces.
The sector faces important underlying challenges from international competition and the strength of the domestic currency due to the expected continued strength of commodity prices.
The manufacturing survey, which is similar to the U.S. ISM index, asked more than 200 companies about production, new orders, deliveries, inventories and employment.
The index show transport equipment, fabricated metals, basic metals and machinery and equipment sub-sectors gained from stronger demand in the mining and infrastructure industries in the month.
“The recovery in manufacturing continued in July despite the waning impacts of fiscal stimulus and above-normal business interest rates,” said Heather Ridout, chief executive officer of the Australian Industry Group. “Private sector demand is slowly re-emerging as a source of growth.”
“While Australia remains the stand-out economy globally, the environment is also patchy and volatile and the world economy faces renewed uncertainty.”
She said manufacturers would be seeking for policies that would help obtain a full recovery.
“Interest rates and fiscal policy need to be set to support further expansion,” Mrs Ridout said.
The survey also suggested improvement in full-time employment growth over recent months could have aided consumer-related sub-sectors, such as textiles, recover in July.
After three months of expansion, the employment sub-index edged down slightly to 47.7 and manufactured exports continued to be limited by the higher exchange rate.
The survey showed manufacturing growth was strongest in NSW, Queensland, South Australia and Tasmania.
