Australian manufacturing activity fell in July, as the sector continues to suffer because of the strong Australian dollar and increased overseas competition, a survey shows.
The Australian Industry Group/PriceWaterhouseCoopers Australian Performance of Manufacturing Index (PMI) fell 9.5 points in July to 43.4.
This followed a 5.2 point rise to 52.9 points in June.
Readings below 50 indicate contraction in activity.
Only three of the 12 manufacturing sub-sectors posted increases in activity in July. They were construction materials and paper printing and publishing, as well as miscellaneous manufacturers.
Australian Industry Group (Ai Group) chief executive Heather Ridout said a variety of factors are weighing on the manufacturing sector.
"The survey respondents indicated that adding to their broader concerns was the prospect of a carbon tax and this was clearly weighing on sentiment," Ms Ridout said in a statement accompanying the survey on Monday.
"I defy anybody to say with any degree of certainty what the impact would be on the Australian economy if the dollar remains at current levels for a protracted period.
"This, together with the volatile and precarious state of international economic conditions and ongoing political uncertainty in Australia, are seriously undermining business confidence in large parts of the economy," she said.
The Australian dollar hit 110.81 US cents on July 27, its highest level since the fixed exchange rate era ended with the float in December 1983.
The unit has stayed above 100 US cents for all but a fews days this year.
PriceWaterhouseCoopers (PWC) global head of industrial manufacturing Graeme Billings said falls in production, new orders and supplier sub-indices put an end to the tentative signs of recovery for the manufacturing sector.
"The seriousness of the challenge facing domestic manufacturers is clear in the further fall in employment in the sector in July, the ninth consecutive monthly fall," Mr Billings said.
The seasonally adjusted employment sub-index decreased 3.3 points in July to 46.1, showing an increase in the pace of contraction.
The new orders sub-index fell in July, down 14.4 points to 40.2.
Seasonally adjusted, the production sub-index fell 7.6 points to 47.1 indicating an contraction in activity.