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--But Still in Expansion for 13th Straight Month
--Latest Result Affected by Closure of Car Assembly Lines
     SYDNEY (MNI) -  - Australia's manufacturing industry expanded in October
for the thirteenth straight month but the pace has slowed significantly in the
last two months, with just three of the seven sub-indexes remained in expansion
in October.
     Data published by the AI Group showed its manufacturing sentiment index
stood at 51.1 in October, down 3.1 points from September and down sharply from
59.8 in August, which was the highest result since 2002.
     October marked the end of automotive production in Australia, with the
closure of the last car assembly lines at General Motors in Adelaide and Toyota
in Melbourne. This was reflected in the lower overall results and produced an
absolute contraction in the index in South Australia.
     New orders and sales expanded at a slower rate in October, while employment
expanded at a slightly stronger pace. But exports fell into contraction,
inventories and production fell sharply while supplier deliveries was mostly
     Among sub-sectors, food and beverage rose to the highest result since May.
But the sector is facing high input costs, with many respondents reporting steep
price rises for dairy product inputs, especially butter, in addition to the
energy and gas price rises.
     Expansions in the large petroleum, coal, and rubber products sector and in
the machinery equipment sector slowed further in October.
     Among price indexes, input prices rose slightly further, the wages
sub-index eased and selling prices remained in contraction. Gains in selling
prices have remained relatively subdued in 2017, so the latest input price rises
for energy, dairy and other inputs will be squeezing manufacturers' margins
again, AI Group said.
     AI Group Chief Executive Innes Willox said that outside of the automotive
sub-sector, conditions appeared to be relatively buoyant, if a touch slower, for
manufacturers in October. 
     "Positive sources of demand for Australian building materials, machinery
and equipment include apartment and infrastructure construction; defence, mining
and agricultural equipment; renewables and utilities projects. Manufacturers
from all sectors continue to report that higher input costs for electricity and
gas and also for selected raw inputs such as milk and butter are biting into
     From Australia Industry Group's Performance of Manufacturing Index for
October published Wednesday:
                          October  Change from September
Australian PMI               51.1                   -3.1
Production                   48.4                   -8.5
New Orders                   55.1                   -0.8
Employment                   53.2                   +0.8
Inventories                  42.6                   -9.1
Supplier Deliveries          50.2                   -0.3
Exports                      48.7                   -2.5
Sales                        51.0                   -0.4
Average Wages                59.0                   -2.2
Input Prices                 66.2                   +0.4
Selling Prices               48.6                   -0.7
Capacity Utilization (%)     74.7                   -2.9
--MNI Sydney Bureau; tel: +61 2-9716-5467; email:
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