Activity in the manufacturing sector grew at a slower pace in May than the previous month, a survey shows.
The Australian Industry Group-PricewaterhouseCoopers performance of manufacturing index fell 3.5 points to 56.3 in May.
Readings above 50 indicate an expansion in activity.
Growth in manufacturing employment and wages strengthened in May but slowing growth in manufacturing production, new orders, inventories and supplier deliveries led to a fall in the number of sub-sectors expanding, from eleven in April to seven in May.
Australian Industry Group chief executive Heather Ridout said the continuing growth in manufacturing in May was a ‘‘welcome sign’’ of a recovery that had achieved ‘‘some traction’’.
‘‘Unfortunately, the patchiness of the past several months also continues and there are worrying signs of weakness among the consumer-related sub-sectors of the industry,’’ she said.
‘‘The sluggishness among the consumer-related sub-sectors reflects the cumulative impact of six rate rises out of seven RBA meetings and, to a lesser extent, an erosion of confidence against the background of falling global stock markets and high public debt levels in a number of European countries.’’
Transport equipment was the highest performer for the month, with the sub-index lifting almost 10 points, while manufacturing exports rose for the third consecutive month.
May’s result follows an easing in growth in manufacturing production and more moderate rates of growth in new orders, inventories and supplier deliveries.
The new orders sub-index fell 4.9 points but remained above the rate of expansion at 54.6.
Meanwhile, employment levels and wages were up in May.
Consumer-related sectors, including food and beverages, clothing and footwear and textiles fell in May as a result of higher borrowing rates and a reduction in disposable income, the survey showed.
PricewaterhouseCoopers head of industrial manufacturing Graeme Billings said the continuing recovery in manufacturing was consistent with developments in the broader economy.
‘‘Employment growth has continued to be strong and this should underwrite a continuation of the positive trend,’’ he said.
But he said there were some factors inhibiting consumer demand which was showing up in the weakness among a number of manufacturing sub-sectors.
‘‘Higher interest rates are playing their part in this and consumers seem to be holding back on their spending,’’ Mr Billings said.
‘‘The picture that emerges in the next couple of months will tell us a lot about the shape of the ongoing recovery.’’
AAP