Posted on 01 Jun 2009
Australian manufacturing activity contracted at a slower pace in May as a bounce in production and new orders from deep lows held out the hope of a turnaround in the hard-hit sector, a survey reported on Monday.
The Australian Industry Group/PriceWaterhouseCoopers Performance of Manufacturing Index (PMI) bounced 7.4 points to 37.5 in May from April’s record low. It remained well below the 50 threshold separating growth from contraction, but was the highest reading in seven months.
“The lift in the Australian PMI brings it into much closer alignment with the direction and strength of global PMIs,” said Ai Group Chief Executive Heather Ridout.
“The slowing of falls in new orders and production across the sector in this months data may indicate that stimulatory fiscal and monetary policy is having a stabilising effect,” she added.
The index of production jumped 12.6 points in May to 41.4, while that for new orders climbed 12.7 points to 39.4.
Since September, the Reserve Bank of Australia (RBA) has slashed interest rates rates by 425 basis points to a record low of 3.0 percent. The central bank holds its monthly policy meeting on Tuesday and the improvement in manufacturing will only add to expectations it will keep rates steady this time.
The survey’s measure of employment edged up 2.8 points to 35.7 in May, though that still pointed to job shedding in many sectors. – Reuters
