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SYDNEY - Activity in Australia's manufacturing sector slowed in October, reflecting mixed domestic demand, marginally weaker export growth and intense import competition, a private survey said today.
The Australian Industry Group PriceWaterhouseCoopers Performance of Manufacturing Index (PMI) fell a seasonally adjusted 1.6 points to 51.9, leaving it just above the 50 threshold that separates growth from contraction.
"Manufacturing has its nose just in front, which is good for confidence in the industry," said Ai Group chief executive Heather Ridout.
"Rising interest rates are bad news for the industry and are punishing businesses which are already under huge pressure," she added.
The Reserve Bank of Australia has raised interest rates twice so far this year and is widely expected to lift them again to 6.25 per cent at its monthly policy meeting next week.
The survey reported growth in seven of 12 sectors, down from nine in September. The sub-index that measures production fell by 4.5 points to 51.2, while the new orders index eased 0.4 points to 53.5. Exports fell back to 51.7, while the employment index dropped 3.6 points to 50.9.
Growth was strongest in basic metal and construction material products, while growth slowed in food and beverages and activity fell sharply in clothing and footwear.
Raw material cost increases accelerated slightly in the month, with the input cost sub-index rising 1.1 points to 69.7.
The largest cost increase was again in basic metal products, followed by clothing and footwear. Costs also rose in food and beverages; chemicals, petroleum and coal products; construction materials; transport equipment; and miscellaneous manufacturing.
The PMI is based on a survey of about 200 manufacturing companies.
- REUTERS
