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--AI Manufacturing Index Expands for 20 Straight Months
By Sophia Rodrigues
     SYDNEY (MNI)  - Following are the five main observations we made from
Australian Industry Group's Performance of Manufacturing Index for May published
Friday:
     --The index eased 0.8 points to 57.5 in May but continued its strong run of
expansion for twentieth month in a row. This is the longest run since 2005.
Significantly, the expansion is getting broad-based with seven of the eight
sub-sectors expanding in May. 
     --Indicators linked to inflation eased in May, suggesting no near term
pressure on inflation but this could change if continued rise in input prices
forces manufacturers to pass on higher costs. Capacity utilization fell 3.8
percentage points to 76.1%, wages fell 1.9 points to 58.4  and selling prices
dropped 2.4 points to 55.1 points. On the other hand, input prices jumped 7.5
points to 70.0.
     --New orders rose 0.8 points to 62.4, thus continuing the expansion run
since late 2016 and suggesting good growth prospect for the remainder of 2018.
     --Sub-sectors providing manufactured goods for large transport projects and
the construction sector continue to report very strong levels of activity,
particularly from the eastern states, though there has been some slowing from
very high levels earlier in 2018. Manufacturers on the east coast continue to
report strong demand from the civil engineering (mainly transport projects),
commercial building and defence industries.
     --Exports sub-index rose by 4.5 points to 52.5 points in May, partially
reversing the large decline into a mild contraction in April. This suggests a
temporary disruption to exports growth may have occurred during April.
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com
[TOPICS: MALDS$,M$A$$$,M$L$$$,MT$$$$]