Jundo Bank / S&P Global flash PMIs from Australia for June 2023
Manufacturing 48.6
- prior 48.4
Services 50.7
- prior 52.1
Composite 50.5
- prior 51.6
From the report, in brief:
- Most of the activity indicators in the survey are softer in June although the key new business and employment indexes remain above the neutral 50 index level. This has been primarily driven by a slowdown in the services sector, which has seen activity soften over the past two months.
- Inflation continues to remain uncomfortably high, with price indexes in the services industry remaining elevated on pre-pandemic levels. Price pressures in the manufacturing industry in contrast have softened and stabilised to pre-pandemic levels as activity in that sector slows.
- The loss of momentum in recent months will probably give the RBA some comfort that economic activity is slowing down across the economy in 2023, following their consecutive rate hikes in May and June.
- The survey suggests that the RBA has time on their side and does not necessarily need to hike rates again in July. The slowdown taking place across the economy provides further evidence that the point at which the RBA can undertake a genuine pause in their tightening cycle is getting closer.
- We cannot rule out a further hike in the next few months, but we are close to a level of interest rates whereby the RBA can sit back for 4-6 months and observe the effects of past interest rate increases.
The current RBA cash rate.
Deputy Governor Bullock was hawkish in her comments earlier this week: