Australia preliminary Flash Judo Bank/S&P Global flash PMIs from Australia for July 2023
PMI Manufacturing 49.6 (prior 48.2) & Services 48.0 (prior 50.3)
Disappointing results with composite flash PMI 48.3 below 50.0 for the first time in half a year
Main contributor to the soft reading for July was a dip in business activity for the services sector, which had previously been staging a recovery in 2023
good news is that this gradual easing in activity will help take pressure off inflation and interest rates, but it will need to be sustained for the rest of 2023 and into 2024
results also suggest that the Australian economy remains on the ‘narrow path’ for a soft landing
economy is still growing with no signs of impending recession
employment index fell again in July but remains in expansion above 50. Labour demand across the economy remains solid and above a level that we would typically see when output and new orders were as soft as they have been recently. This suggests that labour hoarding continues as activity slows.
The concerning feature of the July Flash report is the price indicators which ticked higher in the month. The service sector inflation indicators remain elevated, consistent with inflation of around 4-5%, well above the RBA target of 2% to 3%. “The disinflationary trend evident in the PMI price indicators over the course of 2022 appears to have ceased. With the exception of manufactured good final prices, the inflation measures are at a level in July broadly similar to what we had at the start of 2023.