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Australia preliminary Sept PMI: Manufacturing 46.7 (prior 48.5) Services 50.6 (prior 52.5) | Forexlive

Preliminary Judo Bank S&P Australian Manufacturing PMI slips deeper into contraction at 46.7

  • prior 48.5

Services slips lower but remains in expansion at 50.6

  • prior 52.5

Composite dragged into contraction by the sliding manufacturing PMI, composite comes in at 49.8

  • prior 51.7

In summary from the report commentary:

  • manufacturing sector
    contracted, posting its lowest index reading outside
    of the pandemic
  • The weakness in PMI activity indicators over the
    past three months suggests that households are
    saving more of the government stimulus than initially
    expected
  • results over
    the past quarter indicate that the Australian economy
    is gradually bringing supply and demand back into
    balance at the current cash rate
  • PMIs also reinforce the narrative of slowing job
    growth in the market sector, with employment barely
    staying in growth territory in September, at 50.8. This
    contrasts with official employment data, which has
    consistently shown monthly job growth nearly three
    times the pre-pandemic average, primarily driven by
    significant hiring in the care and education sectors
  • price pressures eased in September, margin
    pressures across the economy remain
  • output
    price index, which tracks the share of businesses
    raising consumer prices, fell to its lowest point since
    January 2021, now close to its pre-pandemic average
  • despite a sharp decline in the input price index,
    it remains only slightly below its FY24 average and
    significantly higher than the pre-pandemic average
    of 56.8. Whether this input price pressure translates
    into higher consumer inflation depends on a potential
    rebound in household spending in FY25. However, with
    early indicators showing subdued demand, margin
    pressures are likely to persist through FY25

The data in these PMI indicators are not highlighting anything unknown, but are supportive of current ‘narrative’:

  • the jobs markets appears to being propped up by government hiring
  • inflation pressures are easing, but CPI data from the Australian Bureau of Statistics will remain the focus

I posted last week on expectations for slowing inflation:

And preview of the RBA statement due tomorrow:

AUD:

And, when to expect a rate cut from the RBA:

AUD update, a wee few tics lower after the PMI data: