Australian CBA PMI manufacturing dropped to 50.1 in October, down from 50.3. CBA PMI services dropped sharply from 52.4 to 50.8. PMI composite dropped from 52.0 to 50.7. The reading suggested subdued business conditions at the start of Q4. Output rose at a softer pace amid the weakest new order growth since April. Business confidence also softened and firms raised their staffing levels only marginally. Meanwhile, input costs continued to increase at a marked pace, leading firms to raise their own selling prices to the greatest extent since last November in a bid to protect profit margins.
CBA Chief Economist, Michael Blythe said: “The trade war and other uncertainties mean businesses are deferring capex and consumers are putting off spending. The resulting drop in production has pulled global manufacturing PMIs lower, taking services PMIs along for the ride. Australian manufacturing and service firms are not immune to these global trends. The ongoing weakness in the flash PMI readings for October should be judged against this global backdrop. Australia is faring a little better than the global trend. PMI readings remain in expansion territory, albeit just. Employment is still growing and longer-run expectations are still positive”.
