Financial News: Australia Private Sector Downturn Softens In February

Australia Private Sector Downturn Softens In February

(RTTNews) - Australia's private sector activity continued to contract in February, though at the slowest pace in four months amid easing cost pressures, flash survey results S&P Global showed on Tuesday.

The Judo Bank flash composite output index rose to 49.2 in February from 48.5 in January. However, any score below 50 indicates contraction in the sector.

A lower level of output recorded in the second month of 2023 was underpinned by both softer services activity and weaker manufacturing production, the survey said.

The services Purchasing Managers' Index climbed to a 4-month high of 49.2 in February from 48.6 in January.

At the same time, the manufacturing PMI edged up to 50.1 from 50.0. The index rose to a two-month high in February, and the score signalled a modest expansion.

The private sector output was negatively affected by a renewed fall in domestic demand due to higher interest rates and economic uncertainties.

Meanwhile, foreign demand rose on the back of better manufacturing export orders in February. Manufacturing and service companies added workforce numbers at solid rates. 

On the price front, input price inflation in the Australian private sector eased to the lowest level in sixteen months. Output price inflation slowed to its lowest level in over a year.

"At this stage the Judo Bank PMIs are pointing to a welcome slowdown in the economy that may help take upward pressure off interest rates," Warren Hogan, chief economic advisor at Judo Bank, said.

"While this will do little to alter the RBA's intentions to raise interest rates further over the months ahead, it does indicate that we may be close to the point where the RBA Board can pause the current tightening cycle."

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