Manufacturers are gaining a new lease of life from rising building activity and a sustained depreciation in the Australian dollar.
After years of being in the doldrums, new figures indicate the manufacturing sector has been expanding for five consecutive quarters.
The composite index of the Westpac-Australian Chamber of Commerce and Industry industrial trends survey rose to 54.2 points in the December quarter from 52.1 points in the previous three months.
A figure above 50 points indicates the sector is expanding.
Westpac senior economist Andrew Hanlan said the strengthening was been driven by new orders, output and overtime, although this has yet to spill over into any notable increase in employment.
Manufacturing was benefiting from rising residential building activity, some evidence of a lift in services investment and a sustained depreciation in the Australian dollar, he said.
The fall in the currency is helping to boost both exports and import competing industries.
Chamber chief Kate Carnell said the survey gave some cause for optimism, coming in contrast to the recent sombre national accounts for the September quarter.
But there was no room for complacency with the improvement in output and new orders yet to show up in robust hiring intentions.
"But there are some early signs that manufacturers are absorbing spare capacity and that the labour market might be starting to improve," Ms Carnell said.
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