PMI Signals Moderate Growth Improvement

The preliminary Judo Bank composite PMI recovered somewhat in August to 51.4 from 49.9, signalling a pickup in growth. Services rose to 52.2 from 50.4 and in line with the H1 average signalling that we should see some improvement in the quarterly GDP growth rate, as the sector accounts for over 80% of activity. Manufacturing remains lacklustre but the pace of contraction eased. There was good news on inflation with selling price increases moderating.

• Judo Bank reports a positive economic position in August with higher new orders, rising business confidence and an increase in employment growth. If this continues then the RBA’s hold is likely to be extended further.
• The price situation suggested that firms are finding it harder to pass on rising costs to customers with input inflation at its highest in almost 18 months but selling inflation easing to its lowest since January. Costs were driven higher by wages, raw materials and transport, with manufacturers reporting shipping delays and higher costs due to issues in the Red Sea and Southeast Asia.
• Both services and manufacturing export orders rose, while manufacturing continues to see contracting total orders.
• Services drove the increase in new jobs but manufacturing employment stabilised in August.