The manufacturing sector has contracted for the first time in this year as the falling Australian dollar weighs on the exporters. The performance of Manufacturing Index of Australian Industry Group dropped down by 4.4 point and slipped to 47.3 points. This suggests that the index has fallen below the mark of 50 points for the first time in 2010 which is the critical level separating expansion from contraction.

The index shows that the previously rising clothing, footwear and construction sectors saw a sharp decline and the declines continued in the food and beverage, and fabricated metal sectors.

The chief executive of the AI Group, Heather Rid out has said the contraction of September comes after months of rising inventories and falling growth rates in the manufacturing sector. Experts say the strength of Australian dollars is making it difficult for the manufacturing exporters to remain competitive in the overseas markets.

The Australian dollar has climbed up to 89 US cents at the beginning of the month September and climbed up to hit a high point of 97.32 in this week and the Federal Reserve is expected to inject billions of dollars to the US economy because of the weak US dollar.