Australia's manufacturing sector maintained modest growth in August, with stronger new orders, business confidence, and employment offset by softer production and renewed supply-chain and cost pressures, according to a survey by S&P Global published Tuesday.

The headline seasonally adjusted S&P Global Australia Manufacturing Purchasing Manager's Index (PMI) was unchanged at 52 in August, signaling a further modest improvement in the overall health of the manufacturing sector.

Business conditions strengthened as new orders increased strongly and at a faster pace, marking the sharpest rise since January, while new export orders also returned to growth after a marginal decline in July.

Manufacturers remained optimistic that improving demand would be sustained, raising expectations for higher production over the coming year, with confidence rising for the fourth consecutive month to its highest level since February.

New order growth drove sustained job creation in the sector in August, with employment rising for a fourth straight month despite a slight decline in production amid muted demand and rising prices.

Input cost inflation edged up in August due to higher freight and fuel costs, while output price inflation eased for the third consecutive month to its slowest pace since February.

Manufacturers cut production and reduced input purchases and inventories, citing sufficient stock levels to meet current workloads, while efforts to streamline inventories led to the sharpest decline in finished-goods stocks since March.

The Middle East war continued to disrupt supply lines to Australia's manufacturing sector, with shipping delays and rising freight costs pushing supplier delivery times sharply higher in August.