Australian Manufacturing Contracted at Slower Pace in August

Australian manufacturing contracted at a slower pace in August as production and new orders improved while food-and-beverage and furniture industries expanded, a private gauge showed.

The manufacturing index rose to 45.3 last month from 40.3 in July, the Australian Industry Group and PricewaterhouseCoopers said in a survey released today. A reading below 50 indicates a contraction.

Reserve Bank of Australia Governor Glenn Stevens will leave the nation’s benchmark interest rate unchanged at 3.5 percent, economists said in a Bloomberg survey before tomorrow’s decision. Resource investment to meet Chinese demand and foreign investment funds seeking a haven have spurred gains in the nation’s currency, which closed above parity with the U.S. dollar for all but 23 days this year.

“Manufacturing conditions continue to be very challenging across the sector with the high dollar and weakness in demand in the domestic and export markets weighing on growth,” Innes Willox, chief executive officer at AIG, said in a statement. “There are some encouraging signs in the August Australian PMI with the production sub-index lifting and the forward-looking new orders sub-index rising strongly.”

The manufacturing index’s reading on wages dropped 6.2 points to 65.2 last month while inventories rose 3.3 points to 49.1, today’s report showed. Supplier deliveries edged up 1.8 point to 44.2.

A gauge of employment rose 2.3 points to 41.2 in August, while new orders surged 8.7 points to 49.1, the report showed. The production measure advanced 5.3 points to 43.1.

The manufacturing survey, which is similar to the U.S. Institute for Supply Management-Chicago Inc.’s factory index, polled more than 200 companies about production, new orders, deliveries, inventories and employment.

To contact the reporter on this story: Michael Heath in Sydney at mheath1@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net

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