AUSTRALIAN MANUFACTURING SECTOR HIT BY RISING DOLLAR.

SYDNEY, March 1 Asia Pulse - A new survey shows that the rise of the Australian dollar has seen a significant decline in manufacturing activity in February.

The Australian Industry Group PricewaterhouseCoopers Australian Performance of Manufacturing Index (PMI) fell to 51 points in February from 56.8 in January.

Australian Industry Group chief executive Heather Ridout said the fall in activity was a wake up call for those who believed sustained economic growth was a given, despite competitive pressures and global currencies realignment.

She said the significant monthly decline was shaped by the impact of the Australian dollar on manufacturing and to a lesser extent the impact of higher interest rates and some slowing in demand.

"This is a reality check underlining the need to maintain strict control on costs and to lift productivity," she said.

"Exports are being hurt, companies are facing increased competition from imports and our improving growth rate is at risk of fading if this trend continues over the next few months."

Manufacturing activity in February contracted in the currency sensitive sectors of food and beverages, textiles, clothing and footwear, wood, wood products and furniture, as well as fabricated metal products, the PMI showed.