Australian manufacturers are feeling more optimistic about the future in the wake of the federal coalition's election victory.
But the strength of the sector continued to lag in the current quarter, extending the loss of momentum that kicked in about a year ago.
The latest quarterly Australian Chamber of Commerce and Industry-Westpac survey of industrial trends found 28 per cent of manufacturers now expect their business to ultimately improve over the next six months
This compares to the previous March quarter, and before the May 18 election, when a more modest 12 per cent believed that would be in the case.
The proportion of manufacturers expecting orders to rise was 36 per cent in the June quarter, compared with 25 per cent previously.
The improved optimism comes as the survey's composite index, which signals the strength of the sector, declined somewhat to 61.5 points from 61.8 points in March.
While still positive, the index reading suggests the slowing of momentum in the sector that began in mid-2018 has persisted, Westpac senior economist Andrew Hanlan said on Tuesday.
"While not a weak reading, conditions over the first half of 2019 were the softest since late 2016,"
The housing downturn and the drought in Australia's east had been negatives for the sector.
But an upswing in public infrastructure investment and a lower Australian dollar had been helpful, with exports maintaining a modest upturn.
ACCI chief executive James Pearson said pointed to the coalition government's planned tax cuts, saying more needed to be done to shore up the economy and improve business conditions.
"It has become even more important that the new parliament pass the government's tax package in its first sitting in July to stimulate consumer spending," he said.
"We also need to invest in developing skills and we need to reduce energy costs."
More than 240 companies across the manufacturing sector responded to the survey, which has been running since 1966.
Australian Associated Press