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Australian services and October composite PMIs fall in contraction

S&P Global / Australia’s Markit PMI for October.

Services 49.3 vs September 50.6
Compound 49.8 vs September 50.9

The preliminary results of the 23rd were in contraction (respectively 49.0 and 49.6

Report Commentary:

  • The RBA’s latest interest rate decision and ongoing global inflationary pressures appear to have weighed on economic conditions and affected the performance of the Australian private sector economy according to the latest PMI data. Demand declined at the fastest rate since September 2021, leading to weaker overall business activity.
  • At the same time, pricing pressures intensified again in the services sector despite easing demand, underscoring the constraints that private sector companies continue to face at the start of the fourth quarter.
  • If the aggravation of the pressures on the prices confirms a new tightening of the monetary policy, this one is part of a context of contraction of the activity which encourages greater caution on the part of the central bank.

With demand falling very rapidly, inflationary pressures “have intensified again”. The job market is holding up, but employment is a lagging indicator. Ugly times yet to come.

AUD/USD was barely moving after the release, overnight gyrations were on the Federal Open Market Committee (FOMC):

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