Manufacturing in Australia was back in growth territory in February with the seasonally adjusted Australian Industry Group -PwC Australian Performance of Manufacturing Index ( PMI) rising 4.4 points to 51.1.

The improvement in the index follows five months of readings below the 50-point level separating expansion from contraction. The sub sectors of wood products & furniture; paper, printing & publishing; chemicals, petroleum & coal products; miscellaneous manufactures; and, to a smaller extent, construction materials sub-sectors, all expanded in February.

Ai Group Chief Executive, Heather Ridout, said: "The welcome lift in the manufacturing index was largely off the back of a substantial improvement in the new order sub-index and those sub-indexes related to restocking. This suggests a more encouraging immediate outlook for the sector. While only reflecting a single month's improvement, the result underlines the resilience of the sector in the face of extremely tough trading conditions and the impact of the strong dollar," Mrs Ridout said.

PwC Global Head of Industrial Manufacturing, Graeme Billings, said: "The improvement in activity in February is a positive sign for the manufacturing sector at a time of both structural and cyclical challenges. These challenges point to the need for further productivity enhancing measures to ensure the sector continues to be competitive in an ever changing environment," Mr Billings said.