A measure of Australian manufacturing activity eased slightly for a second month in November, but continued to point to growth thanks in part to a big improvement in employment, an industry survey showed today.
The Australian Industry Group/PriceWaterhouseCoopers Performance of Manufacturing Index (PMI) dipped 0.5 points to 51.2 in November, but remained above the 50 threshold between contraction and expansion.
In a hopeful sign for the labour market, the index of employment jumped 9.1 points to 53.7, the first expansion in 23 months.
Employment rose strongly in the transport equipment, clothing and footwear, chemicals, petroleum and coal products and construction materials sectors.
The survey's measure of output also showed growth, nudging up 1.0 point to 54.0. However, the index of new orders dropped back 5.8 points to 51.9 and that for inventories fell 6.6 points to 42.8.
"The modest growth in activity in November underlines the tentative nature of the recovery," said Ai group Chief Executive Heather Ridout.
"While new orders growth remained in positive territory, the stronger pace of improvement evident in October was short-lived," she added.
"The strength of the Australian dollar is proving to be an important barrier to stronger recovery, adding to the need for caution in raising interest rates."
The Reserve Bank of Australia (RBA) has already lifted interest rates twice and is widely expected to hike again later on Tuesday following its December policy meeting.
That is in marked contrast to most other developed nations where rates are at record lows, and has helped lift the local dollar to 15-month highs against the US currency.