REPEAT: Australia Mfg Activity Slows But Expands 15th Mth

Repeats Story Initially Transmitted at 22:37 GMT Jan 1/17:37 EST Jan 1

By Sophia Rodrigues

     SYDNEY (MNI) - Australian manufacturing industry activity slowed slightly

in December but expanded for the fifteenth straight month, with all sub-indexes

in expansion for the second straight month. 

     The data point to reasonably strong growth momentum at the start of the

year.

     However, higher energy costs remain a headwind, and in the latest month the

volatile Australian dollar emerged as an additional concern. That worry could

increase as the exchange rate rose to a high of $0.7825 last week, having

appreciated 8% during 2017.

     Data published by the AI Group Tuesday showed all seven manufacturing

sub-indexes expanded in December. The performance of key sub-sectors improved in

December, with food and beverages rising to the high level since April 2015 and

the large metal products sub-sector improving from a recent dip as it benefits

from stronger engineering, mining, defence, utility and agricultural projects.

     Among sub-indexes, exports expanded at a slower rate reflecting the

dampening impact of recent upward pressure on the exchange rate.  Capacity

utilization rose to the highest rate since at least May 2009.

     Input prices eased from a six-year high but manufacturers continued to

report difficulties accommodating higher energy costs. The wages sub-index fell

from a five-year high but the sub-index remained above 60.0, indicating a steady

pick-up in wages. Margins may have improved as selling prices rose slightly,

signaling the ability of some manufacturers to pass on rising costs.

     Overall, even as the overall manufacturing industry shows strong expansion,

there are headwinds from higher energy costs and the rising Australian dollar.

     From Australia Industry Group's Performance of Manufacturing Index for

December published Tuesday:

                          December  Change from November

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

Australian PMI                56.2                  -1.1

Production                    57.7                  +1.1

New Orders                    56.9                  -3.5

Employment                    52.9                  -2.0

Inventories                   55.5                  +1.1

Supplier Deliveries           57.4                  +0.1

Exports                       51.4                  -6.2

Sales                         52.6                  -3.6

Average Wages                 60.2                  -3.9

Input Prices                  70.8                  -5.6

Selling Prices                53.4                  +0.8

Capacity Utilization (%)      79.7                  +4.8

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

[TOPICS: MTABLE]