Australian economy

Australian Manufacturing Shrinks

NASDAQ,

31 January, 2013

SYDNEY--Australia's manufacturing sector contracted for the 11th straight month in January as the nation's producers found themselves squeezed between a slowing economy and a strong exchange rate, a performance gauge produced by an industry group showed.

The Australian Industry Group Performance of Manufacturing Index fell 4.1 points to 40.2 from December. A reading below 50 separates contraction from expansion.

"The well-entrenched pressures that have been confronting the manufacturing sector for several years are being compounded by a slowing in the broader economy," said Innes Willox, chief executive of the Australian industry Group.

The Reserve Bank of Australia has slashed interest rates since late 2011 to lift other sectors of the economy feeling the impact from a cooling resources boom. In December, the central bank reduced the cash rate by a quarter of a percentage point to 3%, matching a low hit in the aftermath of the global financial crisis, in part to alleviate the pressures on the nation's exporters and producers.