AUSTRALIAN MANUFACTURING SECTOR STARTS 2004 ON STRONG NOTE.

SYDNEY, Feb 2 Asia Pulse - Strong domestic demand has enabled Australia's manufacturing industry to begin 2004 on a good note but there has been a slowing in housing and vehicle-related activity, an index has found.

The seasonally adjusted Australian Performance of Manufacturing Index (PMI), released today by the Australian Industry Group (Ai Group) and PricewaterhouseCoopers, rose by a marginal 0.2 points to 56.8 in January.

Comfortably above the 50-point benchmark for growth, this is consistent with current non-farm growth of near four per cent on an annual basis.

Ai Group deputy chief executive Heather Ridout said that while the index confirmed manufacturing generally had started the year on a comparatively positive note, the slowing in the housing and vehicle-related sectors was a concern.

"Strong domestic demand has so far cushioned the full impact of the current export weakness, the appreciation in the Australian dollar and interest rate increases," she said.

"The major challenge for industry in 2004 is to improve productivity, competitiveness and export performance in a higher dollar and higher interest rate environment."

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