Australia's manufacturing activity contracts
Sydney, Feb 1 : Australia's manufacturing sector had a slow start in 2013, according to an industry index released Friday by the Australian Industry Group (Ai Group).
The Ai Group's Performance of Manufacturing Index fell 4.1 index points to 40.2 in January, reported Xinhua.
Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.
The Ai Group said in a report that a cautious outlook, soft demand and the strong Australian dollar were the factors behind the January index fall.
New orders across manufacturing have contracted for 11 months in a row, dipping 6.3 index points to 39.4 in January.
Ai Group Chief Executive Innes Willox said the well-entrenched pressures that the manufacturing sector has been facing for several years are being compounded by slowing down of the economy.
"Successive interest rate reductions have not yet turned conditions around," he noted in the report.
"The rate cuts to date have not offset the combined impact of the substantial contraction in fiscal policy along with the structural challenges due to more intense international competition, the high dollar, ongoing increases in energy costs and increasingly uncompetitive unit labour costs."
But he said the central bank has scope to further interest rate cuts to help reverse the slowing in the domestic economy.