The Ai Group's Performance of Manufacturing Index fell to 56.2 points in December - still well above the 50-point level separating expansion from contraction.
Growth in Australia's manufacturing sector moderated slightly in December, but continued its unbroken run of either expanding or stable conditions that began in October 2016.
The Australian Industry Group's Australian Performance of Manufacturing Index (PMI) slid 1.1 points to 56.2 points in the month, still comfortably above the 50-point level and therefore indicting expansion rather than contraction.
AMP Capital chief economist Shane Oliver said that, under the prevailing conditions, manufacturing's uninterrupted growth in Australia could even run into 2019.
"In the absence of either much higher interest rates or a sharp rise in the Australian dollar - both of which are unlikely - the expansion is likely to run though most if not all of 2018," Mr Oliver said.
Mr Oliver said that the sector had found some support in record low interest rates and an Australian currency well below its record highs of earlier this decade.
"Interestingly, the wages component dipped in December, but at 60.2 it does point to the prospect of some pick-up in wages growth," Mr Oliver said.
The wages sub-index hit a five-year high in November, and was comfortable around 60 points for most of 2017.
Capacity utilisation jumped 4.8 points to 79.7 per cent in December, the highest rate since May 2009.
Ai Group chief executive Innes Willox said the expansion added momentum to a year marked by higher energy prices and the shutdown of Holden and Toyota car production in Australia.
"Manufacturers will be looking to the new year for the progress on the National Energy Guarantee and other measures to put downward pressure on business costs," Mr Willox said.
During December, production, inventories and supplier deliveries expanded at a quicker pace, while employment, exports and new orders and sales slowed - the latter impacted by volatility in the local dollar and the building construction slowdown..
All seven activity sub-indexes expanded in December, but respondents said they continued to face higher energy costs, with some of those costs being passed on to customers.
Meanwhile, the large food and beverages sub-sector recorded its highest monthly result since April 2016, while the non-metallic minerals sub-sector, wood and paper products and machinery and equipment all recorded their lowest index results for 2017.