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Manufacturing continues to fall but at slower rate

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Activity in the Australian manufacturing sector fell in August. It has now fallen for 26 consecutive months, according to the Performance of Manufacturing Index (PMI).

AAP reports that this represents the longest period of contraction in the 21 year history of the Australian Industry Group's (Ai Group) PMI.

The PMI was 46.4 in August, up 4.4 points from July. A figure above 50 indicates the sector is expanding, while any figure under 50 signifies contraction.

According to Ai Group chief executive Innes Willox, the devaluing of the Australian dollar is starting to be felt but its affects are not simple.

"The fall in the value of the Australian dollar is beginning to be felt, with some businesses reporting improved competitiveness against imports," Willox said.

"However, exports continue to struggle, while the lower dollar is also pushing up average costs for non-labour inputs, many of which are imported.

"The persistence of downwards pressure on selling prices indicates that manufacturers have little ability in these difficult market conditions to pass on these higher costs and take the pressure off their margins."

Food beverage and tobacco products recorded the strongest reading of the manufacturing sub-sectors.

‘Petroleum, coal, chemical and rubber’ and ‘printing and recorded materials’ also had gains, but the five other manufacturing sub-sectors all recorded contractions.

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