Preliminary Judo Bank S&P Australian Manufacturing PMI slips deeper into contraction at 46.7
- prior 48.5
Services slips lower but remains in expansion at 50.6
- prior 52.5
Composite dragged into contraction by the sliding manufacturing PMI, composite comes in at 49.8
- prior 51.7
In summary from the report commentary:
- manufacturing sector
contracted, posting its lowest index reading outside
of the pandemic - The weakness in PMI activity indicators over the
past three months suggests that households are
saving more of the government stimulus than initially
expected - results over
the past quarter indicate that the Australian economy
is gradually bringing supply and demand back into
balance at the current cash rate - PMIs also reinforce the narrative of slowing job
growth in the market sector, with employment barely
staying in growth territory in September, at 50.8. This
contrasts with official employment data, which has
consistently shown monthly job growth nearly three
times the pre-pandemic average, primarily driven by
significant hiring in the care and education sectors - price pressures eased in September, margin
pressures across the economy remain - output
price index, which tracks the share of businesses
raising consumer prices, fell to its lowest point since
January 2021, now close to its pre-pandemic average - despite a sharp decline in the input price index,
it remains only slightly below its FY24 average and
significantly higher than the pre-pandemic average
of 56.8. Whether this input price pressure translates
into higher consumer inflation depends on a potential
rebound in household spending in FY25. However, with
early indicators showing subdued demand, margin
pressures are likely to persist through FY25
—
The data in these PMI indicators are not highlighting anything unknown, but are supportive of current ‘narrative’:
- the jobs markets appears to being propped up by government hiring
- inflation pressures are easing, but CPI data from the Australian Bureau of Statistics will remain the focus
I posted last week on expectations for slowing inflation:
- Australia CPI preview – CBA expect “Headline inflation in August back within RBA’s target”
- Australian August Monthly CPI preview – Westpac expect 2.7% y/y for the monthly read
And preview of the RBA statement due tomorrow:
AUD:
And, when to expect a rate cut from the RBA:
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AUD update, a wee few tics lower after the PMI data: