The Ai Group performance of manufacturing index (PMI) fell 1.2 points in March to 44.4 points.
The index has been below the 50 mark that separates expansion from contraction since February 2012.
The new orders sub-index fell to 39.4 points in March while the production sub-index dropped to 41.7 points, reported Xinhua.
The survey found that wood and paper production was the only sub-sector that recorded expansion in March.
Manufacturing exports fell to a record low of 27.4 points in the month.
Australian Industry Group Chief Executive Innes Willox said the March result was disappointing after the encouraging signs of a pick-up in February.
"The strong dollar, falling selling prices, further cost pressures and the weakness of commercial and residential construction continue to take their toll," he said in a statement.
"The decline in export earnings is particularly worrying and reflects soft demand in a number of markets, intense competition and, of course, the high dollar."
--IANS (Posted on 02-04-2013)