Manufacturing & Services Australian preliminary PMIs for August remain in contraction | Forexlive

Commentary from the report, in brief:

• a
  cyclical slowdown in the Australian economy is underway
  with another drop in both the output and new orders
  indexes
• the employment index has picked up and is now
  again comfortably above the neutral level
• confirming the
  persistence of labour demand
• we are
  probably witnessing some labour hoarding by businesses
  who are not convinced that the current slowdown in activity
  will be long-lasting. There is also the possibility that chronic
  labour shortages and skills mismatches are keeping the
  demand for labour elevated despite the cyclical slowdown
  in the economy
• 
  Businesses remain confident about the outlook with the
  future activity index, a proxy for business confidence in the
  PMI survey, up strongly in August
• A stronger labour market reduces the probability of a lasting
  slowdown in economic activity, as aggregate demand is
  supported by ongoing employment growth
• The inflation indicators are not moving in the right direction.
  The disinflation trend that was evident throughout 2022
  has come to an end in 2023 as both input prices and final
  price indexes have stopped falling in the past six months.
  Final prices remain elevated at levels that we judge to be
  consistent with inflation of at least 4%, rather than the RBA’s
  desired 2% to 3%.

The Reserve Bank of Australia will be happy about the strong demand for labour given that one of its two mandates is full employment. They’ll be less happy about persistent inflation pressure, the 2% inflation target is still way out of reach.

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