Judo Bank S&P Global PMI Flash / Preliminary for April 2024
- Manufacturing expanded near its highest level in three months, but has not yet reached the 50 line.
- Services a little lower.
- The composite reaches its highest since April 2022
Some of the relevant comments from the report. On inflation pressure:
- Price indicators rose slightly in April, suggesting inflation in the Australian economy is above the RBA’s target and “sticky.”
- Cost pressures are mounting, which respondents attribute to a combination of rising commodity prices and the effects of the weak Australian dollar.
- Although margin pressures remain evident in both the service and manufacturing sectors, companies are still managing to pass on rising costs in final prices.
On the RBA, it’s me who puts in bold:
- The Judo Bank PMI highlights the resilience of Australia’s business sector. The business sector continues to hire and invest even as consumers remain cautious. As employment levels continue to grow and pressure on household finances eases in 2024, this vision of a “soft landing” is increasingly threatened by the vision of a “cyclical recovery “.
- The RBA is likely to be concerned that a pick-up in activity, before inflation returns to target, could threaten price stability in the medium to long term.
- These results are not consistent with a reduction in interest rates at any time in the foreseeable future and increase the risk that the RBA will have to start raising interest rates again at some point during the second half of 2024.
This article was written by Eamonn Sheridan at www.forexlive.com.
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