RTTNews - Australia's manufacturing activity expanded for the first time in 15 months in August, reflecting sharp increases in production, new orders and deliveries, the latest report from the Australian Industry Group and PricewaterhouseCoopers showed Tuesday.

The seasonally adjusted Performance of Manufacturing Index climbed 7.2 points to 51.7 in August, rising above the 50 point level separating expansion from contraction. This is also the highest level since March 2008, and parallels the performance of the Global PMI, which reached a 18-month high value of 50 in July.

The AiG's Heather Ridout, commenting on the latest PMI figures said, Manufacturing activity has been improving month by month with the pick-up being driven by a combination of improved demand and the rebuilding of inventories. Clearly the government stimulus measures have been effective, with respondents citing factors as underpinning these improvements as government infrastructure demand, investment incentives and cash payments.

The production index rose to its highest level since December 2007, with the index climbing 10.2 points to 53. New orders were also at their highest levels in about two years, with the index rising strongly by 12.4 points to 60.3, and also represented the second consecutive double-digit rise since July's gain of 11.3 points.

Suppliers delivery grew for the first time in 13 months, with the sub-index rising 8.5 points to 50.1. However, the inventories index declined by 1.4 points to 48.

Meanwhile, employment continued to fall for the 20th consecutive month, with the index dropping 0.8 points to 40.5. Average wages continued to expand, but at a slightly slower pace, with the index falling 0.2 points to 54.4.

The growth in the input prices continued, although at a slower pace, with the sub-index falling 0.8 points to 53.3. The selling price index increased 0.2 points to 42.2, but remained in contraction for the fifth consecutive month.

Graeme Billings of PricewaterhouseCoopers said, Signs that conditions facing manufacturers have begun to ease are welcome. But, he added that conditions remained tight and the pressures on profitability would persist over the coming quarters. Going ahead, Billings said the key issues would be to maintain skills and integrating cost effective supply chains.

Meanwhile, in other developments, Australia posted a seasonally adjusted current account deficit of A$13.34 billion in the second quarter compared to the upwardly revised deficit of A$6.35 billion in the first quarter, data released by the Australian Bureau of Statistics showed Tuesday.

At the same time, building approvals continued to fall, although at a slower pace in July. Residential building approvals were down 3.9% on a yearly basis in July, better than a 9.1% fall anticipated by economists and the 14.3% drop seen in June.

Meanwhile, the Reserve Bank of Australia in its latest monetary policy meeting on Tuesday, held the interest rate at a 49-year low of 3%, for the fifth consecutive month.

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