Australian manufacturing takes a tumble

CANBERRA - Activity in Australia's manufacturing sector fell in May following a year of weak or declining activity, as input costs surged at their fastest rate in four years, a private survey said today.

The Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index (PMI) dipped 1.4 points to 48.9 in May.

A reading above 50 points indicates manufacturing is generally expanding, while a reading below 50 indicates a contraction in activity.

The survey's index of overall production fell 2.0 points to 48.0, its first reading below 50 since January, while the employment index fell for its 11th straight month, down 1.4 points to 44.2 -- its fastest fall in five years.

Input prices surged 11.4 points to 80.0, their highest reading since data was first collected in June, 2002..

"The manufacturing sector continues to be buffeted by a range of strong forces, including the latest rise in raw material costs, the high dollar and interest rate uncertainty," Australian Industry Group chief executive Heather Ridout said.

"This points to a continuing squeeze on manufacturing margins and activity."

Seasonally-adjusted, seven sectors reported growth in May, up from six in the previous month, with the strongest growth in the consumer-based sectors of textiles, food and beverages, clothing and footwear, and wood and wood products.

- REUTERS