The manufacturing sector continues to suffer, despite getting help from a falling exchange rate and lower interest rates.
The Australian Industry Group's (Ai Group) Performance of Manufacturing Index (PMI) was 42.0 in July, down 7.6 points from June.
The below-50 reading shows activity in the sector is falling. Manufacturing hasn't posted a monthly rise since June 2011.
Ai Group chief executive Innes Willox said the manufacturing sector had failed to build momentum after a promising result the previous month.
"Manufacturers are telling us that, while the fall in the Australian dollar and the May interest rate cut have been extremely welcome, they have not yet been enough to turn around a very challenging business environment," he said.
"In fact, the drop in the currency has fuelled higher prices for imported inputs without any real corresponding improvement in stronger exports."
Mr Willox said confidence among manufacturers and their customers remained relatively depressed.
"Concerns are evident about the timing of this year's federal election with related policy uncertainty in key areas," he said.
"This is causing many businesses to further postpone their investment decisions."
The Reserve Bank of Australia cut the cash rate in May to a record low of 2.75 per cent after lowering it four times in 2012.
The Australian dollar has fallen around 14 US cents since early May and currently is trading below 90 US cents.
Share
