The Australian manufacturing sector has posted some ‘tentative signs of improvement’ according to the latest report released by the Australian Industry Group (Ai Group).

The Australian Performance of Manufacturing Index report lifted 5.4 points to finish at 45.6 in February, where any score below 50 indicates a contraction, and the distance from 50 indicating the strength of the decrease.

The Index found that the new orders sub-index rallied by 7.4 points to finish at 47.5, while exports remained broadly unchanged at 31.2 points, with the sub-index mauled by the strong Aussie dollar.

"Although remaining under 50 points, this was the best monthly result for the Australian PMI® since last August and it was encouraging to see some easing in the severe pressures facing manufacturing,” Ai Group’s Chief Innes Willox said.

"With opportunities for revenue growth so constrained and with rises in wages and input costs - particularly for energy - businesses continue to cut costs and look across their business for efficiencies," Mr Willox said.

Some of the key findings include:

  • Improvements in the sub-indices for new orders, production and employment across manufacturing contributed to an easing in contraction in February according to the latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) which was 5.4 points stronger at 45.6 in the month (readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease).
  • The manufacturing production sub-index increased by 6.2 points to 46.6.
  • The new orders sub-index rose 2.4 points to 41.8.
  • The food, beverage & tobacco products (57.9) and wood & paper products (57.6) sectors both expanded in February.
  • The printing & recorded media sub-sector registered the steepest fall in February - down 3.9 points to 30.2.
  • Input cost growth gained pace again at 60.2. Increases were recorded across all sub-sectors.
  • Exports continued to slump, with the sub-index at 31.2 in February very close to the record low for this sub-index recorded last month (31.1).