June data shows marginal growth in services activity but confidence slumps to its lowest level since November 2023.
Australia’s services sector returned to expansion in June, with the PMI rising to 50.5 from 48.7 in May. The uptick was driven by increased staffing rather than stronger demand, as new orders contracted for the fourth consecutive month.
Despite the headline improvement, business confidence fell to a 2.5-year low, signaling potential cuts in hiring and investment. Input and output price inflation eased across all sectors, suggesting modest disinflationary pressure, though the underlying fragility raises doubts about sustained growth.
The Reserve Bank of Australia is unlikely to adjust rate expectations based on the data, as the rebound lacks durable demand support. New export orders also declined for a second month, linked to geopolitical tensions in the Middle East.