Australia's manufacturing activity continued to contract in June but the rate of contraction eased, according to a survey released on Monday by the Australian Industry Group (Ai Group).

The Australian Industry Group/PriceWaterhouseCoopers Australian Performance of Manufacturing Index (PMI) was 4.8 points stronger at 47.2 points in June, indicating that the sector contracted at a slower pace compared to the previous month.

Reading below 50 indicates a contraction in activity with the distance from 50 indicative of the strength of the decrease.

Ai Group said manufacturers surveyed expressed ongoing concern about the strong Australian dollar, the start of the carbon tax and import competition.

The index showed only four of the 12 sub-sectors recorded an expansion in June, including clothing and footwear, paper, printing and publishing, transport equipment, and machinery and equipment.

Eight sub-sectors contracted in June, down from nine in May.

Ai Group Chief Executive Innes Willox said that the contraction in manufacturing activity extended into its fourth month in June as the strong Australian dollar, domestic and global uncertainties, the slump in construction and concerns about the implementation of the carbon tax had weighed on the sector.