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Manufacturing expands in May

Author Michael Roddan. Business Spectator

Australia’s manufacturing sector has expanded for the first time in six months, as the lower Australian dollar helps companies export goods.

The Australian Industry Group’s performance of manufacturing index (PMI) lifted 4.3 points to 52.3 in May.

The index now sits above 50 points, the level which separates expansion from contraction, after five months of sluggish activity.

AiG said the benefits of the recently lower dollar flowed through to a range of industries, with the machinery and equipment sub-sector recording a fifth consecutive month of expansion in exports in May.

The Australian dollar exchange rate has been on a steady decline against the US dollar, losing around US20c since the middle of last year. The currency has recently traded in a range between US75c and US80c.

AiG said a resurgence in food and beverage exports in May contributed to a lift across the entire level of exports.

“Manufacturing new orders expanded after five months of contraction while production also expanded after contracting for six months,” AiG said.

But manufacturing sales declined for a 12th straight month in May, signalling ongoing weakness in local demand.