SYDNEY, May 1 (Reuters) - Australian manufacturers enjoyed strong business conditions in April with output, new orders and employment all expanding, though higher input prices pressured profit margins, two surveys reported on Tuesday.
The Commonwealth Bank/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 55.5 in April, from March's 54.3, putting it comfortably above the 50 level that separates growth from contraction.
Another survey by the Australian Industry Group (AIG) found its main activity index dipped 4.8 points in April to 58.3, but that was off a record peak and still very strong historically.
This was also the 19th consecutive month of expansion, the longest run since 2005. Sales, new orders and employment all remained well above to 50 break-even level.
"Manufacturing started Q2 on a healthy note, with readings on orders, jobs and output expectations sending positive signals about the outlook further into 2018," said CBA chief economist, Michael Blythe.
Stronger demand was stretching suppliers, with delivery times lengthening sharply, while firms also reported difficulties in acquiring raw materials.
"Our concerns about capacity pressures remain. These pressures are helping support labour demand, but inflation risks are rising as well," Blythe added, noting input and output prices were growing at the high end of the survey range.
The official measure of consumer prices remained subdued in the first quarter at an annual pace of 1.9 percent, though there was a slight uptick in underlying inflation.
"The indications of a modest turnaround in the recent Q1 CPI data appear to be continuing into Q2," said Blythe.