SYDNEY, Oct 31 (Reuters) - Australian manufacturing activity accelerated to a four-month peak in October as output and new orders expanded, encouraging firms to add employers at the fastest pace in 10 months, a survey showed on Tuesday.
The Commonwealth Bank and IHS Markit Purchasing Managers' Index (PMI) rose to a seasonally adjusted 55.5 in October, from 53.8 in September.
New orders from abroad expanded at the fastest pace since July with firms reporting increased demand from a number of countries in the Asia-Pacific region.
"The sector looks well placed with manufacturers reporting greater customer demand and indicating that the higher Australian dollar has not crimped demand from our major trading partners in Asia," said CBA chief economist Michael Blythe.
"The rise in labour demand is an encouraging sign that manufacturers are seeking to take advantage of the positive backdrop."
Close to one-fifth of survey respondents reported a rise in staffing levels, compared to less than 8 percent that noted a fall.
Firms were also upbeat on the outlook for the next 12 months with over two-thirds of respondents predicting higher output. Improved production lines, expected organic growth and incoming new business were all cited as reasons underpinning confidence.