S&P with the sagging flash PMI.
Australia’s private sector recorded a sixth straight month of growth in July, according to Flash PMI® data. Private sector output and new orders continued to increase, albeit at marginal rates as the pace of selling price inflation hit a fresh record high. July data also signalled an expansion in Australia’s private sector workforce numbers and a first reduction in backlogged work in ten months. Overall business confidence remained positive but slipped to the lowest since April 2020.
The S&P Global Flash Australia Composite PMI Output Index* eased from 52.6 in June (final reading) to 50.6 in July. This marked a sixth consecutive month of Australian private sector growth, albeit one that was only mild and the slowest in the current sequence of expansion.
The overall slowdown mainly reflected a weaker improvement within Australia’s service sector, while manufacturing output growth was unchanged.
New orders also recorded decelerated growth with anecdotal evidence suggesting that the effects of interest rate hikes and sustained inflationary pressures were beginning to be felt in the form of lower levels of demand.
Notably, foreign demand and staffing levels expanded at solid rates in July, with rising employment and slower new order growth enabling firms to deplete their backlogs of work for the first time in ten months. Despite greater capacity, some firms continued to report labour shortages.
Inflation rates remained severe in July. Survey respondents reported that wage rises, as well as rising supplier prices were primary drivers of input cost inflation.
More notably, the rate of selling price inflation surged to a fresh record high as firms continued to pass on higher input cost burdens.
Overall business sentiment across the Australian private sector remained positive but was the lowest since April 2020.
