A leading indicator of Australian economic activity showed key sectors of the economy growing strongly in the second-quarter – a positive sign after the first quarter’s positive but weak 0.3 per cent GDP figure.
But the picture remains patchy. Also on Monday, Australian Bureau of Statistics data showed building approvals falling by more than expected in May. Meanwhile, ANZ job ads rose 2.7 per cent in June – showing some sectors of the economy are still growing demand.
The figures will provide a hopeful, if complicated picture for the Reserve Bank to digest at its monthly monetary policy meeting on Tuesday. All of the 24 economists polled by Bloomberg still expect it to keep rates on hold, despite many of the world’s leading central bankers having given public comments last week that appeared to prime the market for an end to loose monetary policy.
The Commonwealth Bank’s new Purchasing Managers Indexes, released for the first time on Monday in partnership with global financial analysis firm IHS Markit, showed uniform growth across manufacturing and services.
PMIs are closely followed, leading indicators of economic activity conducted around the world, and work through surveys of businesses asking whether their output was higher, lower or unchanged on the previous month. A figure greater than 50 shows economic expansion, and both the manufacturing and service indexes were strong.
In June 2017, the services PMI showed a figure of 57.0, up from May’s 54.8.
“Both activity and new business rose at stronger rates, whilst increased workloads encouraged companies to take on additional staff,” CBA’s report on the index stated.
“Although input costs continued to rise, inflation was the lowest in 14 months, and companies raised their own charges marginally. Buoyed by trends in demand, optimism regarding the future hit a new survey high”.