It has been a tough start to 2008 for manufacturers.

 

The Performance of Manufacturing Index from the Australian Industry Group (AiG) and PricewaterhouseCoopers indicates just marginal growth in March after soft results in January and February.

 

Output has barely changed, while employment is shrinking at a more rapid rate.

 

AiG says manufacturing is clearly being hit by rising interest rates.

 

AiG chief executive officer Heather Ridout says manufacturing has been subdued for the past three months.

 

"Clearly employment's off. Production's essentially stable, but quite a soft level," she said.

 

"Worryingly new orders are starting to ease off. So you'd have to say the sector is really muddling around a reasonably ordinary level of activity."

 

It says the uncertain global economic outlook and strong dollar are also hurting.

 

And it says further policy tightening by the Reserve Bank appears increasingly unnecessary.

 

The central bank board is meeting this morning, and is widely tipped to announce an unchanged cash rate this afternoon.