Australia CBA PMI Manufacturing rose 0.2 to 49.8 in February, up from 49.6. However, PMI Services dropped to 48.4, down from 50.6. PMI Composite also turned into contraction at 48.3, down from 50.2. The rate of output reduction was the “steepest seen since data collection began in May 2016”. Panel membered linked this to “a combination of subdued client demand, adverse weather and the Covid-19 outbreak”.
CBA Senior Economist, Gareth Aird said: “The February flash PMIs imply a contraction in private demand. Whilst this is clearly a disappointing result, it is not altogether surprising given the two exogenous shocks that have hit the Australian economy – the bushfires and the coronavirus (Covid-19).”
“Our main concern is that these event have hit the global and local economies at a time when domestic demand was already soft. The level of both the services and manufacturing PMIs highlights the need for more policy stimulus. With monetary policy doing most of the heavy lifting an easing in fiscal policy continues to look the most appropriate response to support aggregate demand.”