(eToro Blog) The Australian manufacturing industry showed strong growth towards the end of 2011 as reported by the Australian Industry Group manufacturing index. The manufacturing index rose 2.4 points to 50.2 in December, finishing the year better than expected. A reading above 50 indicates expansion in activity.
The strongest expansion was in the miscellaneous, basic metals, paper, printing and publishing and transport equipment. However there were declines in manufacturing of fabricated metals, chemicals, petroleum and coal products, construction materials and textile areas. An increase in wages and input prices continued to put pressure on manufacturer’s profit margins. Production levels increased with the sub index rising to 51.0. New orders declined at a slower rate with the sub index rising 1.8 points to 49.9.
Australian Industry Group Chief Executive, Heather Ridout said, “The result points to the resilience of Australian manufacturers against formidable headwinds. However, it needs to be borne in mind that the majority of the sub-sectors recorded declines, highlighting the continuing impact the high dollar, soft domestic demand and the uncertainty in the global economy are having on the industry. Therefore, while the tentative pick-up in manufacturing activity is encouraging, clearly the sector remains vulnerable to any renewed downturn in the global economy and to the underlying structural pressures associated with strong commodity prices.”
Asian markets are aiming higher as market resume trading for the New Year. The Japanese Nikkei is up 0.6%, the Hang Seng is up 2.1%, the Shanghai index is up 1.1% and the Australian S&P ASX is up 1%. The AUDUSD has gained close to 100 pips in the New Year on positive risk sentiment. Traders on OpenBook are primarily short on the AUDUSD with average limits at 1.0100 and stops at 1.0350.
Copyright 2012 eToro Blog
