Australian manufacturing contracts in February: report

Australia's manufacturing sector contacted for the third consecutive month in February, a new report revealed on Monday.

The Australian Industry Group Australian Performance of Manufacturing Index (PMI) for February stood at 45.4, a fall of 3. 6 points from January, and below the 50 mark, which indicated contraction.

Manufacturing production was down 3.7 points to 45.0, new orders dropped 3.4 points to 44.2, manufacturing sales was steady at 45.3, supplier deliveries dropped 6.0 points to 46.9 and stock levels was down 4.4 points to 47.

"While there are bright patches, most notably for food and beverages and producers of building materials, weak domestic demand from businesses and households is offsetting the boost that many domestic manufacturers might have expected to flow from the weaker Australian dollar," said the group's chief executive, Innes Willox, in a statement.

"The weakness of domestic demand certainly provides further backing for the Reserve Bank's decision in February to reduce interest rates and it underlines the importance of using the May Budget to provide a boost to domestic activity including by delivering on the commitment to cut the company tax rate to 28.5 percent for all companies," he said. Endi