Who says Australian manufacturing is dead?

A prominent survey of Australian manufacturing activity has shown significant growth in the sector, which recorded its strongest rate of expansion in more than a decade.

A prominent survey of Australian manufacturing activity has shown significant growth in the sector, which recorded its strongest rate of expansion in more than a decade.

According to Australian Industry Group’s (Ai Group) Australian Performance of Manufacturing Index (Australian PMI), manufacturing surged last month to its strongest rate since April 2004.

The index rose by 4.6 points for the month to a rating of 58.1. Readings above 50 on the index indicate expansion.

Commenting on the findings, Ai Group chief executive Innes Willox said the manufacturing sector's performance was particularly notable given that the machinery and assembly sector, which has been hit hard by the mining downturn, moved out of contraction for the first time in over four years in March.

“The strong manufacturing performance and its expansionary run since the middle of 2015 are in large part due to the boost provided by the lower Australian dollar. Even though the dollar has appreciated quite strongly since mid January, the local currency is still close to 30 per cent lower against the US dollar and almost 20 per cent lower against the trade-weighted index compared with three years ago,” he said.

“The positive impacts of this depreciation have taken some time to accumulate, as businesses have become more confident that it will be sustained. With momentum positive and new orders growing strongly, the positive trend appears to have some way to run.”

Five of the eight manufacturing subsectors profiled by the index recorded expansion in March, led by the food, beverages and tobacco sector, which hit a record high reading of 71.0.

Unsurprisingly, large metal products continued to show weakness, falling further to a reading of 41.8.

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