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Australian manufacturing rebounded in Sept

AAP logoAAP 2/10/2016 Stuart Condie

Australian factory activity has rebounded from its lowest level in more than a year on the back of a recovery in food and beverage manufacturing.

The Australian Industry Group's performance of manufacturing index (PMI) regained 2.9 points to 49.8 in September.

While that shows some recovery from August's 14-month low, it's still below the 50-point level that indicates the sector is expanding.

"Mixed results across the manufacturing sub-sectors underline the fragility of activity within manufacturing and indeed across the broader economy," Ai Group chief executive Innes Willox said in a statement on Monday.

"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."

Mr Willox said a reduction in the company tax rate would help improve the investment outlook.

Growth in sales and production were offset by a further drop in employment and a contraction in new orders.

Food and beverage manufacturing bounced back from August's inventory-related slump, rising 4.1 points to 52.8.

Large machinery and equipment also moved out of contraction, rising 4.6 points to 52.8, while printing and recorded media, metal products, and petroleum and chemical products continued to expand, albeit at a slower rate than in August.

The non-metallic mineral products, and wood and paper products manufacturing sub-sectors both slipped into contraction.

Three of the PMI's seven activity subindexes expanded in September, with production, deliveries and sales all recovering from steep contractionary results in August.

Exports rose 5.3 points to 50.0, but new orders slipped into contraction in September, declining by 3.2 points to 48.3.

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