Australia: Services PMI falls in July
The Judo Bank Australia Services Purchasing Managers’ Index (PMI) fell to a six-month low of 50.4 in July from 51.2 in June. As a result, the index remained above the 50.0 no-change threshold but signaled a softer improvement in services-sector business activity compared to the previous month.
The slowdown in business activity reflected softer demand conditions: July saw the first decrease in new business in six months and the fastest so far in 2024. Additionally, new export business contracted at the steepest pace in seven months. As a result, firms hired staff at a slower rate as they adjusted to lower capacity pressures.
On the pricing front, July saw a notable increase in selling prices—the fastest in nearly a year—driven by rising costs for inputs, transportation and wages. Lastly, sentiment among Australian service sector firms remained positive amid expectations that business development efforts will spur sales growth in the coming year, though optimism was at its lowest level in seven months.
Matthew De Pasquale, economist at Judo Bank, commented:
“Over the next two months of PMI releases, we will better understand how households use the FY25 government stimulus (tax cuts and cost-of-living support). With a portion to be spent, we anticipate an improvement in the key activity indicators in August and September. […] With aggregate demand supported by stimulus and ongoing labour shortages in the economy, we expect market sector employment to continue to grow throughout the second half of 2024.”