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Manufacturing falls again

Manufacturing activity in the construction and mining industries saw solid growth throughout August, while the rest of the Australian manufacturing industry dropped for the third month in a row due to tighter financial conditions, according to a survey produced by Australian Industry Group and PriceWaterhouseCoopers.

Consumer demand for wood and furniture products, textiles, clothing and footware dropped throughout the month due to higher interest rates and rising petrol costs affecting both discretionary spending and the demand for housing construction, said the survey. A weak Australian dollar and higher material costs also contributed to the poor results.

Meanwhile, solid mining and infrastructure demand resulted in rising construction materials activity following two consecutive months of decline.

Production and employment in the manufacturing industry as a whole fell during August, though at a slower rate than in July, suggesting hope for the industry in September.

The Australian Industry Group — PriceWarerhouseCopoers Australian performance manufacturing index (PMI) rose by 0.1 index points to 47 points during the month, however this is still well under the 50 points needed to separate expansion from contraction, said the survey’s findings.

New orders for housing and other manufacturing fell for the fourth consecutive month, putting pressure on future production, while inventories and supplier deliveries remained stable. Exports fell, however.

The strongest states in all manufacturing sectors were Western Australia and Queensland, while all other states fell.

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