Manufacturing sheds post-election bounce

The manufacturing sector appears to have enjoyed just a brief, one-off bounce since the federal election, with business conditions eased in the first three months of this year.

However, manufacturing did expand for two consecutive quarters for the first time since early 2011.

The composite index of Australian Chamber of Commerce and Industry (ACCI)-Westpac industrial trend survey released on Thursday dropped 5.4 points to 50.9 in the March quarter after spiking in the final three months of 2013.

An index above 50 points indicates the sector is expanding.

ACCI acting chief economist Burchell Wilson said the result was a "little bit disturbing".

Expectations for the index in the future also tumbled, from 60.3 points in the December quarter to just 51.6 points in the March quarter.

"If actual conditions continue to disappoint expectations, we may see a further correction in the year ahead," Mr Wilson told reporters in Canberra.

However, Westpac senior economist Andrew Hanlan drew some positives from the report, not least the survey's labour market index remaining positive for a second quarter in a row and coming off nine consecutive negative quarters.

"It definitely does suggest that employment growth has turned the corner," Mr Hanlan told reporters.

While not strong, export orders are moving in the right direction, posting their best result since 2010/11, he said.

He said investment improved, while the upswing in housing and dwelling approvals suggests there is a pipeline of building work over the next couple of years.