Invest
Green shoots emerge in the Australian economy
There are signs of the Australian economy bouncing back as the private sector, particularly the services sector, benefits from growing output as life returns to normal post-COVID-19, research has shown.
Green shoots emerge in the Australian economy
There are signs of the Australian economy bouncing back as the private sector, particularly the services sector, benefits from growing output as life returns to normal post-COVID-19, research has shown.
The latest Commonwealth Bank Purchasing Manager Index (PMI) has pointed to a return to growth, although it has come from a low base.
CBA’s head of Australian economics, Gareth Aird, said: “The June results indicate we are now past the lowest point in economic activity. Overall conditions are still very soft, but there were some encouraging signs about further improvements still to come.”
The services sector has the strongest rise in activity, growing for the first time in five months in June as operations returned to normal and demand for services increased.
However, not all sectors showed signs of improvement, with manufacturing production continuing to fall, although at a slower pace, indicating stabilisation as new orders and exports resumed.
The return to growth in June has come on the back of easing of social distancing measures to curtail the spread of the coronavirus, which consequently saw a resumption of operations at many firms.
The headline PMI index in June was 52.6, up significantly from 28.1 in May.
Readings above 50.0 indicate an improvement in business activity in the previous month, while readings below 50.0 show a decline.
The Flash Services Business Activity Index was at 53.2, up from 26.9 in May, while the Flash Manufacturing PMI was at 49.8, up from 44.0 in May.
New business in the services sector also rose, but only marginally as the sector continues to deal with the ongoing impact of the coronavirus pandemic.
Employment decreased for the fifth consecutive month, but the rate of job cuts was the weakest in this sequence. Meanwhile, both input costs and output prices rose for the first time in three months.
“The further decline in employment was disappointing, but given the lagging relationship between employment and output, it is not surprising,” Mr Aird said.
“We should see headcount lift from here.”
The rate of decline in employment in the manufacturing sector remained steep, as firms operated below capacity.
“Considerable disruption to supply chains remained, while the rate of input cost inflation quickened to the sharpest since May 2018. Selling prices were raised, following a fall in May,” the index report said.
Confidence over the 12-month outlook improved to a 16-month high in the manufacturing sector, with firms expecting a return to normality over the coming year.
“Confidence has improved in both the manufacturing and services sectors,” Mr Aird said.
“And the lift in both input and output prices is welcome as it suggests we are more likely to be in a period of disinflation rather than deflation.”
The general increase in confidence in the 12-month outlook was attributed to optimism that the worst of the disruption from the coronavirus pandemic has passed, and that operating conditions will gradually return to normal.
Sentiment was the highest in nine months, with optimism increasing across both the services and manufacturing sectors.
Did you enjoy this article? You might also be interested in:
- Prime Minister launches 15 new projects to kick-start economy
- Experts predict economy won't recover until 2022
- Australia's economy is 'better than expected'
RELATED ARTICLES
About the author
About the author
Economy
RBA's hawkish stance reflects inflation concerns, State Street economist comments
In a recent statement, the Reserve Bank of Australia (RBA) has signaled a hawkish stance on interest rates, drawing insights from financial experts about the implications for Australia's economic ...Read more
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
Economy
Inflation concerns rise as Australia's CPI climbs to 3.8% in October
Australia's latest Consumer Price Index (CPI) figures have sent ripples through the economy, with headline inflation accelerating to 3.8% year-on-year in October, up from 3.6% in September. The data, ...Read more
Economy
October CPI results pose challenges for RBA’s monetary policy stance
In a surprising turn of events, the October Consumer Price Index (CPI) data has raised eyebrows among economists and market strategists, revealing stronger-than-expected inflationary pressures in ...Read more
Economy
Global deal activity declines by 6% amid economic uncertainty, reports GlobalData
In a year characterised by economic turbulence and evolving market conditions, global deal activity has witnessed a notable downturn during the first ten months of 2025. According to GlobalData, a ...Read more
Economy
Australia’s softening labour market puts another RBA cut in play — here’s what business should do now
A four-year high in unemployment has revived expectations the Reserve Bank could deliver another rate cut as soon as November. With quarterly GDP growth running at 0.6 per cent and annual growth at ...Read more
Economy
Rising CPI reinforces RBA’s stance as rate cut expectations remain: State Street
State Street Global Advisors says the Reserve Bank of Australia (RBA) is likely to hold its current policy outlook following the release of September quarter inflation data, which showed an unexpected ...Read more
Economy
NSW SES boosts tsunami preparedness ahead of World Tsunami Awareness Day
As World Tsunami Awareness Day approaches on 5 November, the New South Wales State Emergency Service (NSW SES) is ramping up efforts to enhance tsunami preparedness along the east coastRead more
Economy
RBA's hawkish stance reflects inflation concerns, State Street economist comments
In a recent statement, the Reserve Bank of Australia (RBA) has signaled a hawkish stance on interest rates, drawing insights from financial experts about the implications for Australia's economic ...Read more
Economy
Navigating the inflation maze: How CFOs can outsmart economic hurdles in Australia
Fresh inflation data have cooled expectations of near-term rate cuts in Australia, intensifying pressure on margins, capital allocation and demand. Rather than wait for monetary relief that may not ...Read more
Economy
Inflation concerns rise as Australia's CPI climbs to 3.8% in October
Australia's latest Consumer Price Index (CPI) figures have sent ripples through the economy, with headline inflation accelerating to 3.8% year-on-year in October, up from 3.6% in September. The data, ...Read more
Economy
October CPI results pose challenges for RBA’s monetary policy stance
In a surprising turn of events, the October Consumer Price Index (CPI) data has raised eyebrows among economists and market strategists, revealing stronger-than-expected inflationary pressures in ...Read more
Economy
Global deal activity declines by 6% amid economic uncertainty, reports GlobalData
In a year characterised by economic turbulence and evolving market conditions, global deal activity has witnessed a notable downturn during the first ten months of 2025. According to GlobalData, a ...Read more
Economy
Australia’s softening labour market puts another RBA cut in play — here’s what business should do now
A four-year high in unemployment has revived expectations the Reserve Bank could deliver another rate cut as soon as November. With quarterly GDP growth running at 0.6 per cent and annual growth at ...Read more
Economy
Rising CPI reinforces RBA’s stance as rate cut expectations remain: State Street
State Street Global Advisors says the Reserve Bank of Australia (RBA) is likely to hold its current policy outlook following the release of September quarter inflation data, which showed an unexpected ...Read more
Economy
NSW SES boosts tsunami preparedness ahead of World Tsunami Awareness Day
As World Tsunami Awareness Day approaches on 5 November, the New South Wales State Emergency Service (NSW SES) is ramping up efforts to enhance tsunami preparedness along the east coastRead more
