The manufacturing sector nudged growth in June, according to the latest Australian Industry Group Australian Performance of Manufacturing Index (Australian PMI®) which recorded 49.6 – up 5.8 points from the previous month (readings below 50 indicate a contraction in activity). The improvement in the overall reading was largely due to an expansion in production (50.2) from the previous month, and improvements in the new orders index (49.9) and supplier deliveries (49.6). However, despite falls in the Australian dollar, manufacturing exports continued to struggle. Ai Group Chief Executive, Innes Willox, said: ‘The unexpected lift in the Australian PMI® is a welcome, though tentative, sign that manufacturers’ efforts to fight back against the severe pressures facing the industry are beginning to pay off. The Reserve Bank’s reductions in the cash rate appear to be supporting a weak pick-up in local demand and the drop in the exchange rate may be assisting domestic producers in the local market. Export conditions, however, remain extremely challenging.  ‘Notwithstanding the very welcome fall in the Australian dollar over the past two months and the relatively low level of official interest rates, Australia remains a high-cost location for production and we need to generate a significant lift in productivity to restore competitiveness. This is critical if the manufacturing sector is to contribute to the economic resilience and diversification required as the mining investment boom fades,’ Mr. Willox said.