Economic Buzz: Australia business activity nearly stabilises in June, but confidence falls to post-pandemic low

Flash PMI data from S&P Global showed that business activity in Australia came close to stabilising in June after a slight decline in May. The seasonally adjusted S&P Global Flash Australia PMI Composite Output Index rose to 49.8 in June from 48.7 in May, remaining just below the 50.0 no-change level.

Services activity was broadly unchanged, while manufacturing output continued to decline slightly at a pace similar to May. Despite the improvement in overall activity, new orders fell solidly for the fourth consecutive month since March, with many businesses citing ongoing market uncertainty. New export orders also declined again.

Business confidence weakened significantly, dropping to its lowest level since March 2020 and, excluding the pandemic-affected period, the weakest since the survey began more than a decade ago. Confidence declined in services but improved in manufacturing.

Employment increased modestly in June after a first decline in nearly 18 months in May, supported by business expansion plans and preparations for future projects. Higher staffing levels, combined with weaker demand, enabled firms to reduce outstanding work at the fastest rate in more than two-and-a-half years.

Cost pressures remained elevated but eased further. Input costs rose sharply, though inflation slowed for a second straight month and was the weakest since March. Higher fuel and transportation costs remained key concerns. Companies also increased selling prices at a slower pace, with output price inflation easing to its lowest level since February across both manufacturing and services sectors.

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