Manufacturing activity improved in September: Ai Group

The Ai Group has reported that manufacturing activity in Australia improved in September, helped by activity in the food industry which recovered after a contraction the month before. The Australian Performance of Manufacturing Index rose 2.9 points to 49.8 in September, after contracting for the first time in more than a year during August.

A reading below 50 indicates contraction in activity, with the distance from 50 indicating the strength of the decrease, according to AiG.

"With business investment the major missing ingredient to a more comprehensive lift in domestic activity, there is a clear need for policy action in this area," said Ai Group Chief Executive Innes Willox.

"In considering the government's Enterprise Tax Plan, federal parliamentarians should consider the material improvement to the investment outlook that would come from a reduction in the company tax rate."

The food subsector gained 4.1 points to 52.8, while the large machinery and equipment subsector moved out of contraction, gaining 4.6 points to 52.8.

Three of seven subindexes expanded in the month, including production, deliveries and sales, recovering from a weak result in August.

Meanwhile, three manufacturing subsectors maintained August's expansion, defined as above 50 points in three-month moving averages. These were printing and recorded media, metal products, and petroleum and chemical products.

However, Willox said there were still some signs of deeper weakness in the detail.

"The broadly stable result saw growth in sales and production offset by a further drop in employment and a contraction in new orders," he added.

"Mixed results across the manufacturing subsectors underline the fragility of activity within manufacturing and indeed across the broader economy."

Source: ABC News