Australian manufacturing contraction eases in February

Australian manufacturing contraction eased in February, according to a monthly survey released by the Australian Industry Group (Ai Group) on Monday. The latest Ai Group Performance of Manufacturing Index (PMI) firmed 1.9 points to 48.6, but was still below 50, indicating a contraction in activity. The PMI is a composite index based on the five indicators for production, new orders, deliveries, inventories and employment. The Ai Group's survey found the production sub-index rose to 51. 5 points in February, up from 45.2 in January, and the new orders sub-index improved by 1.2 points to 50, but sub-indexes of employment, stocks and supplier deliveries remained in the negative territory. "While an easing in the pace of contraction and the lift in production in February are welcome, overall conditions in manufacturing continue to reflect the intense pressures from the strong dollar, high energy costs and the legacy of a long period of low productivity growth," Ai Group Chief Executive Innes Willox said. "Manufacturers' margins remain under considerable pressure and export sales are very weak," said Willox.