The manufacturing sector has contracted for the second straight month after a short expansion following the federal election, as new orders fall on the back of reduced business and consumer confidence, and as firms fret over the future of the auto industry. But the local currency slipped slightly on the back of a three-month low for the index measuring China's manufacturing output in December, before recovering. It was buying US89.15¢ about 2pm. The HSBC China manufacturing PMI found that while the sector continued to expand last month, it was growing at a slowing rate as foreign sales declined slightly for the first time in four months. "The recovering momentum since August 2013 is continuing into 2014, in our view," HSBC's chief economist for China, Qu Hongbin, said. With inflation still benign, we expect the current monetary and fiscal policy to remain in place to support growth. The Australian PMI production sub-index increased to 48.6 points last month while the new orders sub-index contracted for the second month after expanding in the wake of the September federal election.