Australia's Industry Index remained in contraction early in the new year across categories, against signs of stabilization in construction, which returned to growth for the first time in two years, Australian Industry Group said on Wednesday.

The index showed the industry activity remained in contraction during Dec. and Jan. at negative 12.3, unchanged from November, with overall activity, employment, new orders and input volumes continuing to decline.

The Australian Purchasing Managers' Index (PMI) edged down to negative 19.4, as manufacturing sector suggested no major improvement, curtailed by tariffs, cost pressures, low investment, weak cashflow and offshore competition.

While the Australian Performance of Construction Index (PCI) indicator jumped by 0.22 points to 5.2, entering positive territory first time since mid-2023, as project inquiries increased with a further pickup expected in coming months.

The holiday period helped boost metals and food industries, in comparison with machinery and chemicals posting seasonal slowdowns.

Rising input costs, taxes, regulatory pressures and economic uncertainty continued to weigh on activity across most sub industries, it added.