Judo Bank / S&P Global Australia flash PMI data for May 2023
Manufacturing unchanged at 48.0
- prior 48.0
Services down to 51.8
- prior 53.7
Composite lower to 51.2
- prior 53
Commentary from the report, in brief:
- Both the output and new orders results are in expansionary territory. Over the past two months, we have seen the best readings since the middle of 2022. This brings into question whether the economic slowdown of the past year has run its course.
- Australia’s manufacturing sector continues to slow in May and is on track for a soft landing . This is consistent with a global manufacturing slowdown, weaker consumer goods demand and a lack of growth in construction activity across the Australian economy. “The manufacturing indicators do not signal recession. We would need to see a further marked deterioration in the manufacturing survey to be concerned about a sharper downturn.
- Far from the risk of recession, the services PMI suggests that the risk is that the Australian economy is experiencing a pick-up in activity since February.
- While better economic conditions are always welcomed, the complicating factor in 2023 is inflation . The RBA is trying to engineer a soft landing to rid the economy of inflation. But if they don’t lean hard enough on monetary policy, we could see a more stubborn inflation emerge which will ultimately require a bigger lift in interest rates.