Australia’s [B]AiG Performance of Manufacturing Index[/B] rose to 51.7 in August, showing the sector expanded for the first time in 14 months. Still, AiG chief executive officer Heather Ridout struck a cautious tone, saying that although “manufacturing activity has been improving…conditions are uneven and pressures remain on employment.” Indeed, looking at the components of the metric reveals that the rate of contraction in Employment accelerated for the first time since February. Ridout added that “There is a risk, particularly if interest rates are raised too early in the recovery phase, that as the effect of stimulus measures wane, the nascent recovery will fail to get traction.” The government of Prime Minister Kevin Rudd has distributed over A$12 billion in cash handouts this year and set aside A$22 billion for infrastructure projects. The Reserve Bank of Australia has kept interest rates at 3% since April and is widely expected to keep them unchanged at a policy announcement scheduled for Tuesday at 04:30 GMT. RBA Governor Glenn Stevens was broadly optimistic when rates were last announced earlier this month, conspicuously removing language that left the door open for further easing that had been prominently featured in the bank’s official policy statements over the previous two months, and sounded outright hawkish as he gave his semi-annual testimony before the Parliament’s finance committee. While trading in overnight index swaps suggests the market is pricing in virtually no chance of an actual rate increase, the RBA chief’s aggressive rhetoric will have traders looking for clues on when tightening may indeed transpire.