Australian manufacturing has expanded for a tenth consecutive month, despite the rising currency.
The Australian Industry Group's performance of manufacturing index dropped 4.7 points to 53.4 in April, but the index remains above the 50-level indicating the sector is expanding.
Australian factory activity has now recorded the longest unbroken run of growth since September 2006.
"The current expansion in manufacturing is a much-needed turnaround for a sector that has been through a very tough decade," Ai Group chief executive Innes Willox said in a statement on Monday.
"While margins remain tight, recovering domestic market share and building momentum in a variety of export markets provide a strong foundation for the lift in confidence required for the sector to move up another gear."
The survey said that although the Australian dollar had appreciated in recent months, it was still supporting manufacturing growth, albeit at a slower pace.
All seven sub-indexes of the PMI grew in April except employment. The strongest was production, sales and stocks.
New orders also continued to expand, but grew at a slower pace.
Five of the eight manufacturing sub-sectors also expanded over the month led by food and beverages, wood and paper and non-metallic mineral products.
However, the March recovery by machinery and equipment was fleeting with the subsector contracting in April.
Manufacturers reported mixed conditions and demand in some subsectors as well as tightening margins and increasing competition.
The report also said pessimism about the domestic economy, the upcoming federal election and the lack of large infrastructure projects was weighing on demand.
Mr Willox urged the federal government to use Tuesday's budget to encourage the manufacturing sector.
"A budget that boosts incentives for business investment and innovation would come at just the right time for manufacturers to capitalise on recent gains," Mr Willox said.
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