Australia services PMI hits six-month high of 53.6 as new orders return
The renewed rise in new orders, the first in five months, alongside the composite index's jump to its fastest expansion pace since January, points to a domestic recovery gaining genuine traction rather than a one-off bounce. That said, the reacceleration in output price inflation, even as input cost growth eased to a five-month low, suggests firms are using the improved demand backdrop to rebuild margins, a dynamic that could keep services inflation stickier than the headline cost figures alone would imply. Business confidence recovering to its strongest level since before the Middle East conflict began in February also points to a more constructive outlook among firms, though the survey's own commentary flags that geopolitical uncertainty still clouds the durability of the upturn. The employment and backlog data together suggest capacity pressure is beginning to build, which could feed into wage and price dynamics if new orders continue at this pace.
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Earlier:
Australia's service sector recovery gathered pace in July as new orders returned to growth, even as firms pushed through faster price increases to rebuild margins.
Summary:
- Services Business Activity Index rose to a six-month high of 53.6 in July from 50.5 in June, a second consecutive monthly rise in output
- Total new orders increased for the first time in five months, though new business from abroad continued to fall, partly linked to lower tourism numbers
- Business confidence recovered from June's 31-month low to its highest level since just before the Middle East war began in February
- Employment rose for a second consecutive month at a solid pace, though backlogs of work also increased for the first time in five months
- Input cost inflation eased to a five-month low, driven by fuel and wage costs, while output price inflation reaccelerated, led by the information and communication sector
- The Composite Output Index, combining services and manufacturing, rose to 53.2 in July from 50.4, its fastest expansion since January, with output rising across both sectors for the first time in six months
Australia's services sector expanded at its fastest pace in six months in July, according to the latest S&P Global Australia Services PMI, as a renewed rise in new orders helped the sector's nascent recovery gain momentum. The seasonally adjusted Services Business Activity Index rose to 53.6 from 50.5 in June, marking a second consecutive monthly increase in output and the strongest reading since the start of the year's second half.
The expansion in business activity was centred on the real estate and business services, and information and communication categories, while transport and storage remained under pressure. Total new orders increased for the first time in five months, with survey respondents reporting they had been better able to convert opportunities into new contracts during the month. New business from abroad continued to decline, however, albeit at a reduced pace, with some respondents attributing the softness to lower tourism numbers.
Business sentiment also improved markedly, recovering from June's 31 month low to its highest level since just before the outbreak of war in the Middle East in February. Firms cited tentative signs of improving market conditions and expansion plans as key supports for their 12 month outlook. That improved confidence fed through to hiring, with employment increasing for a second consecutive month at a solid pace, as some firms reported filling previously vacant positions and others expanded operations. Despite the pickup in staffing, backlogs of work accumulated for the first time in five months as renewed order growth placed pressure on capacity.
On the cost side, input prices continued to rise rapidly in July, though the pace of increase eased to its lowest in five months, having peaked in April, with panellists linking cost pressure mainly to higher fuel and wage costs. Output price inflation told a different story, reaccelerating at the start of the third quarter to levels close to those seen in April and May. Four of the five broad sectors covered by the survey reported higher charges, led by information and communication, while finance and insurance was the only sector to lower selling prices during the month.
The Composite Output Index, which weights services against manufacturing according to their share of GDP, rose to 53.2 in July from 50.4 in June, its fastest rate of expansion since January. For the first time in six months, output increased across both monitored sectors as manufacturing joined services in returning to growth. Andrew Harker, economics director at S&P Global Market Intelligence, said the renewed rise in new orders had provided fresh impetus to the sector's expansion, though he cautioned that inflationary pressures and ongoing uncertainty tied to the Middle East situation meant growth was not guaranteed to build further in the months ahead. He added that the prognosis for third quarter GDP was looking more positive based on the historical relationship between the PMI data and official growth figures.
This article was written by Eamonn Sheridan at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
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