Sydney, Apr 2 (IANS): The Australian manufacturing sector moved into negative territory in March as softer demand dampened activity in the sector, a survey released Monday by the Australian Industry Group (Ai Group) showed.

The Australian Industry Group/PriceWaterhouseCoopers Australian Performance of Manufacturing Index (PMI) fell 1.8 index points to 49.5 in March, reported Xinhua.

Readings below 50 indicate a contraction in activity with the distance from 50 indicative of the strength of the decrease.

According to the latest index, the clothing and footwear and wood products and furniture were the worst performers among the 12 sub-sectors in March, with largest falls in activity.

However, transport equipment and machinery and equipment sub-sectors recorded increases in activity in March due to ongoing demand from mining projects.

Ai Group Chief Executive Designate Innes Willox said the manufacturing sector was having trouble building momentum towards recovery.

"The relentless pressure from the (strong Australian) dollar, weak domestic demand and a flat commercial and residential construction sector continue to inhibit manufacturing performance," Willox said in a statement accompanying the survey's release Monday.

"The fragility of the sector highlights the importance of the federal budget in maintaining programs that build productivity," he said.