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Australia's Industry Activity Stays in Contraction in April as Costs, Fuel Prices Rise, Australian Industry Group Says

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Australia's industry activity remained in contraction in April, as persistent weakness in manufacturing and construction and rising fuel-driven cost pressures outweighed early signs of stabilization in orders and employment, the Australian Industry Group said on Wednesday.

The Australian Industry Index rose by 9.8 points in April but remained firmly in contraction at negative 24.4.

The Australian Performance of Manufacturing Index rose by 0.7 to negative 27.9, while the Australian Performance of Construction Index jumped 37.8 to negative 19.3, as manufacturing weakened and construction saw a modest recovery, though both remained in contraction amid fixed-price contracts limiting fuel cost pass-through.

There was some stabilization in April, with business activity rising 4.5 points to negative 31.2, employment increasing 4.5 points to negative 25.2, and new orders climbing 7.7 points to negative 24.8, reflecting a partial recovery from previous declines.

Input prices increased by 13.5 points to 69.3, sales prices rose by 3.9 points to 23.1, and average wages went up by 2.1 points to 36.2, with rising costs widening the gap between inputs and output prices and limiting firms' ability to pass on higher costs.

Rising fuel prices are being passed through supply chains, with transport levies driving April inflation, and wider energy shortages are likely to spread price pressures to industrial materials in the months ahead.

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