Australian manufacturing activity expanded in January for a second consecutive month, a private survey shows.

The largest gains were in the food and beverages sub-sector.

The Australian Industry Group/PriceWaterhouseCoopers Australian Performance of Manufacturing Index (PMI) rose 1.4 points in January to 51.6.

A readings above 50 indicates an expansion in activity.

Australian Industry Group (Ai Group) chief executive Heather Ridout said the result was encouraging but the rate of increase was still very small.

“Respondents cited ongoing global economic uncertainty and strong overseas competition as factors inhibiting growth in January,” Mrs Ridout said in a statement accompanying the survey’s release.

Textiles recorded the biggest decline in activity while the sub-sectors related to the construction industry also performed poorly.

Six of the 12 manufacturing sub-sectors posted declines in activity in January.

PriceWaterhouseCoopers (PWC) partner for Economics and Policy Jeremy Thorpe said activity in the manufacturing sector had improved from its recent low in August 2011.

“The long-term outlook for Australian manufacturers is unpredictable and this is placing further pressure on businesses,” Mr Thorpe said.

“It is critical that businesses continue to analyse their business models, look for improvements and make changes where they see gaps.”