Business activity in the Australian private sector decreased fractionally in February as a dip in services activity outweighed continued growth in manufacturing. New orders also ticked down, but employment continued to rise solidly. On the price front, both input costs and output prices increased at sharper rates than in January. Companies, meanwhile, were confident that output would return to growth over the coming year.
The two components:
“The dip in the PMI below the 50 line that separates expansion from contraction is a significant event. It is the first negative reading in the life of the Australian PMI survey. It indicates a loss of momentum in the Australian economy at the start of 2019. And it underlines the shift in forward guidance by the RBA to a more neutral setting”. Mr Blythe added: “The divergence between (contracting) service sector activity and (expanding) manufacturing activity should be noted. It shows the slowdown is not broadly based and the more forward looking components like jobs and business sentiment point to a recovery later in 2019”
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
