Uncertainty in the political arena, slow-paced production growth, and a drop in new orders put on the brakes for manufacturing activities in August.

The latest Australian Industry Group (AIG) - PricewaterhouseCoopers Australian Performance of Manufacturers Index (Australian PMI) went down from 2.7 points to 51.7 in August. According to AIG Chief Executive Heather Ridout, “The Australian PMI recorded its eighth consecutive month of expansion, in part due to manufacturers’ links with the construction and mining sectors.”

The AIG head sees a stronger pace of recovery in the months ahead due to the stronger performance of the clothing and footwear, wood products, and furniture sub sectors. The encouraging performance of the sectors, she said, “suggests that consumer demand may be picking up.”

PricewaterhouseCoopers Global Head of Industrial Manufacturing Graeme Billings also sees a recovery in manufacturing, but he said, “we are not yet seeing the sort of impetus from the private sector that is needed to underwrite aggregate growth at a time of receding public sector demand.”

The AIG survey showed an increase from 3.6 points to 51. 3 points in the employment sub-index in August. Wages grew strong with its sub-index going up from 3.0 points to 71.0.