Strong showing in manufacturing sector consolidates recovery

AUSTRALIA’S manufacturing sector continued to strengthen in April, with factory activity expanding for a seventh consecutive month.

The Australian Industry Group’s performance of manufacturing index (PMI) climbed 1.7 points to 59.2 in April, remaining above the 50-point level that indicates an expansion in activity.

That was despite recent data indicating softness in economic and wages growth, and worries over high unemployment.

“The strong showing by Australian manufacturing in April consolidates the recovery that has been under way in the industrial sector since August 2015,” AI Group chief executive Innes Willox said.

Each of the seven subindexes expanded in April.

The growth was led by sales which were up 7.8 points to 65.5; exports, up 7.5 points to 58.6, and supplier deliveries rising 9.4 points to 62.3. New orders dipped 1.1 points to 61.5 but remained in expansion territory during the month.

Among the manufacturing sub-sectors, seven of the eight segments expanded during April, with only textiles, clothing, furniture and other products sub-sector contracting.

There was strong growth in exports and local sales of food and beverages manufacturing, building materials, specialist machinery and equipment and specialist chemicals.

A rebound in the agricultural and mining sectors pushed the demand for locally manufactured equipment. APA Group has paid $200 million for Origin Energy’s Darling Downs 110 megawatt solar farm as well as an option on the nearby Beelbee development site.

Under the deal, APA will also execute a long-term offtake agreement with Origin which will underpin the construction of the Darling Downs site and mean Origin will buy all the energy as well as the renewable energy certificates.

Construction is expected to be completed next year. The Darling Downs project has the capacity to generate electricity for about 32,000 homes.

APA managing director Mick McCormack said the renewables project was a good fit for the APA and met the company’s return criteria.

The project will be APA’s second renewables project. It also owns the Emu Downs project in WA.

Two other Queensland solar projects, at Longreach and Oakey, were also nearing construction following $31.5 million in funding from the Clean Energy Finance Corporation.

The CEFC has now committed $150 million to large scale projects in Queensland. It provided $12 million in senior debt finance to the 15 megawatt Longreach project which will cost about $28 million. Another $19.5 million will be provided to the Oakey project which has a development cost of $47.5 million.

Both projects are owned by Canadian Solar which has offtake agreements with the Queensland Government.

Canadian Solar general manager Daniel Ruoss said Longreach would generate power for about 5000 homes and Oakey 7000. Construction is expected to start this year and commercial operations will occur in 2018.

Palisade Investment Partners and ESCO Pacific also said the $225 million Ross River Solar Farm had reached financial close.

Construction will now commence on the 148MW project, located on a former mango plantation near Townsville.