From Andrew Hanlan at Westpac:
The Westpac-AusChamber Actual Composite index moderated in the December quarter to 53.5, down 3.2pts, from 56.7 in September. This is a still solid reading, above the historic average of 49 and up from an average of 52.4 for 2014.
The trend strengthening of the Composite index in 2015 has been centred on new orders, output and overtime, with some moderation in new orders and output in the final months of the year.
Manufacturing is benefitting from a strong upswing in new home building activity, as well as the lift in renovation activity and from the significant improvement in competitiveness flowing from the sharply lower currency, down 25% against the US dollar from mid-2014. However, the cycle remains constrained. Consumer spending is below trend, mining investment is turning down sharply and global fragilities persist.
Exports are rising modestly, supported by the lower currency but constrained by still sluggish world growth. A net 3% of firms reported a lift in exports.
The manufacturing sector has been decimated by the strong Dollar during the mining boom. Now mining investment is falling. Manufacturing will take many years to recover and it is important to maintain strong infrastructure spending to fill the hole.