A newish indicator from Commonwealth Bank of Australia
"Key findings" highlighted by the report:
- The Australian service sector continued to expand markedly during July. Activity rose at an unchanged rate, while new work increased to the highest degree in three months. Capacity remained under pressure, however, with backlogs rising further. That led to further gains in employment. Price data showed accelerated rises in both input costs and output charges, whilst business confidence remained highly positive.
More, I've bolded some parts for emphasis - a very strong report:
- a further uptick in levels of incoming new work
- reports of a positive economic climate, firmer demand and successful promotional work, the rate of growth in new business was the best recorded for three months
- A similar trend was seen for employment in July, with service providers adding to their workforce numbers to the greatest degree since April
- Rising workloads at units was the principal reason underpinning growth in employment
- Higher capacity helped to restrict backlog accumulation during the latest survey period
- levels of work outstanding continued to increase, marking a fifteenth successive month of growth, the rate of expansion was the slowest recorded by the survey since the start of 2017
- With employment levels continuing to rise, and reports of higher wages being paid, anecdotal evidence suggested that operating expenses related to the service sector workforce increased
- suppliers were reported to be passing on their own price rises
- The net impact was a strong rate of input price inflation that was the highest recorded by the survey to date
- Efforts to protect margins were subsequently bolstered during the month. This was reflected by an acceleration in output price inflation to a modest pace
- Finally, with around two-thirds of the survey panel indicating expectations for a rise in activity over the coming 12 months, business confidence remained high
Commenting on the Commonwealth Bank Services and Composite PMI data, Michael Blythe, Chief Economist at the Commonwealth Bank:
- "The dominant services sector remains in very good shape. Not only are services generating strong growth in activity and jobs, but these trends are expected to continue."
- "Strong growth is bringing with it some new problems for business. Some panellists are reporting capacity pressures with a flow on to wages and operating costs. Input costs are up as a result. Strong demand is allowing higher costs to be partly reflected in prices charged. Businesses need to remain focused on productivity improvements and capacity expansion as a way of dealing with these challenges."