REPEAT: Australia AI Mfg Index Rises to Highest Since 2002

Repeats Story Initially Transmitted at 23:36 GMT Aug 31/19:36 EST Aug 31

--Manufacturing Expands for 11 Straight Months

     SYDNEY (MNI) -  - From Australia Industry Group's Performance of

Manufacturing Index for August published Friday:

                          August  Change from July

--------------------------------------------------

Australian PMI              59.8              +3.8

Production                  61.4              +2.4

New Orders                  64.3              +8.5

Employment                  56.4              -1.0

Inventories                 58.9              +9.9

Supplier Deliveries         52.9              -1.1

Average Wages               59.0              +3.3

Input Prices                62.9              -6.4

Selling Prices              53.7              +3.7

Exports                     49.3              -4.6

Sales                       50.9              -4.9

Capacity Utilization (%)    77.0              +0.7

     FACTORS: The manufacturing index rose further in August to reach the

highest level since 2002, and marking 11 straight months of expansion -- the

longest run since 2007. Six out of seven activity sub-indexes expanded with

exports the only one in contraction, albeit a mild one, likely reflecting a

stronger exchange rate. New orders rose to the highest level since May 2002 and

production continued its strong run of expansion in response to rising forward

orders and stockpiling which was also reflected in a 9.9-point jump in stocks

sub-index. Input prices fell but remained at elevated levels but wages rose and

selling prices also rose. A bright spot was some manufacturers commenting that

their ability to raise selling prices to match rising costs was improving.

Still, pressure on their margins remained, with rising energy costs adding to

this issue. Among sub-sectors, food, beverages and tobacco continued its long

run of expansion but respondents noted the higher Australian dollar has been

curbing their rate of growth. The non-metallic mineral products sub-sector which

is mainly building materials, rose 3.5 points to record high 72.3 due mainly to

pick-up in non-residential building activity which offset some easing in

residential construction. 

     TAKEAWAY: The gains in the manufacturing industry are occurring despite an

elevated exchange rate, which is a very positive development. The industry is

getting support from non-residential and infrastructure construction, and

renewed activity in the mining sector as metals prices recover. The survey

vindicates the optimism shown by Reserve Bank of Australia in forecasting

continued growth for the economy despite the elevated Australian dollar, though

it remains concerned that further rise could hurt growth and employment

prospects.

     COMMENTS: AI Group Chief Executive Innes Willox said the alignment of the

stars continued for domestic manufacturing with index indicating a very strong

performance in August.

     But "alongside the weight of good news, the recent lift in the value of the

Australian dollar is dampening the outlook for sales growth both in export and

the domestic markets. As well, energy prices and the uncertainty around energy

policy are inhibiting investment and causing grave concern particularly among

the more energy-intensive segments of the industry," he said.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

[TOPICS: MTABLE]