Manufacturing up, transport benefits

Domestic manufacturing volumes have expanded for the first time in 15 months

September 2, 2009

Manufacturers have delivered some positive economic news, with volumes from domestic producers expanding for the first time in 15 months.

The transport sector is among one of the industries to grow the most, after it was confirmed supplier deliveries rose by 8.5 index points to 50.1 and delivery of transport equipment delivery was one of five sectors to expand.

The 7.2 point expansion, as detailed by the PricewaterhouseCoopers Australian Performance of Manufacturing Index (Australian PMI), was the first in 15 months and brought the country’s total index points to 51.7.

According to Australian Industry Group (Ai Group) Chief Executive Heather Ridout, the expansion can be put down to sharp increases in new orders, production and deliveries which have been boosted by government stimulus.

"Manufacturing activity has been improving month by month with the pick up being driven by a combination of improved demand and the rebuilding of inventories," Ridout says.

"Clearly the government stimulus measures have been effective, with respondents citing factors as underpinning these improvements as government infrastructure demand, investment incentives and cash payments.

Ridout also says the increasing number of new orders coupled with stabilising inventories provides hope that growth may be sustained over the coming months, but warned uneven conditions as well as rising unemployment rates could derail the progress.

"There is the risk, particularly if interest rates are raised too early in the recovery phase, that as the effect of stimulus measures wane the nascent recovery will fail to get traction," she says

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