The
Flash readings are here:
Non-manufacturing 50.7, highest since July 2022
- flash was 49.2
- prior 48.6
Composite 50.6
- flash reading was 49.2
- prior 48.5
From the commentary in the report:
- Service sector activity improved further in February and is now back in expansionary territory
- a clear indication that the slowdown in economic activity over the second half of 2022 has run its course
- new business activity and future activity expectations are still on a gradual softening trend, reflecting an expectation within the business community that higher interest rates are yet to be fully felt across the economy
- The composite employment index, which reflects the demand for labour across both services and manufacturing industries, is at a level consistent with a stable unemployment rate, if not a potential for some further modest falls in the months ahead
- The Judo Bank PMI labour demand indicators do not suggest that a sustained rise in the unemployment rate is on the cards over the first half of 2023
- The composite output price index, which is probably the best indicator of consumer price inflation trends in this survey, continues to decline and in February was at the lowest level since August 2021
- Of some concern, however, is the stabilisation of input prices across the Australian economy at what are still very high levels by historical standards. This suggests that wage and energy cost pressures are still being felt by Australian businesses in early 2023
- Far from an economy tumbling into recession in 2023, the February PMI’s are telling us the Australian economy is still expanding and employing workers while price pressures persist. A soft landing is still the most likely outcome for Australia over the next 12 months, but the risks are prominent and in the short-term are skewed towards a more resilient economy and more stubborn inflation
- “For the Reserve Bank these risks suggest that a further tightening of monetary policy will be required over the next three months. I expect to see a 25bp rate hike next week at the March Board meeting and further rate hikes that take the cash rate to between 4% and 4.5% by the end of this year.
