In August, Australia CBA PMI Manufacturing dropped from 51.6 to 51.3. CBA PMI Services dropped from 52.3 to 49.2. PMI Output dropped from 52.1 to 49.5. The set of data signalled the first reduction in output since March, centering on the service sector. CBA noted that “currency weakness led to a faster rise in manufacturing input prices, but services costs increased at a weaker pace, as did output prices across both monitored sectors.”
Commenting on the Commonwealth Bank Flash PMI data, CBA Chief Economist, Michael Blythe said:
“A persistent concern is that the fallout from the US-China trade war will dent global capex and consumer spending as cautious businesses and households retreat to the sidelines. The shift back into contractionary territory in the CBA Flash PMI reading for August indicates that Australia is not immune to these global risks. The concerns about weak output readings are tempered a little by positive indications on the labour market and future business expectations.”
“The challenges faced by the RBA in their attempts to return inflation to the 2-3% target band are also highlighted in the survey. The lower Aussie dollar is putting upward pressure on input prices. But the competitive trading environment is limiting the flow through to output prices.”
