The Australian manufacturing sector has reverted to contraction to end 2013, after a couple months of gains.

The Australian Industry Group’s Performance of Manufacturing Index (PMI) came in at 47.6 in December, down 0.1 per cent from the previous month and below the 50-point level that distinguishes expansion from contraction.

The index has now consolidated back into negative territory after two months of small expansions in September and October.

The Ai Group’s chief executive, Innes Willox, says manufacturing looks set for further weakness in 2014, despite record low interest rates and a declining Australian dollar.

“New orders and employment fell further behind in December casting doubt over whether the start of 2014 will usher in a more positive outlook for manufacturing activity,” he noted in the report.

“The sector, and indeed the broader economy, remains stuck behind the eight ball and manufacturing in particular is, as yet, in no position to assume a role in generating alternative sources of growth as the mining boom fades.”

The food and beverage manufacturing sector kept expanding (at 55.8 points), as did two smaller sub-sectors of manufacturing, wood and paper products (73.1) and printed and recorded media (59).