Australia PMI Hits 6-Month High on Services Rebound

Australia's private sector grew at its fastest pace since January, lifted by a services rebound and the first manufacturing orders increase in five months.

The S&P Global Australia Composite PMI hit 52.8 in July, up from 51.2 in June. Services activity accelerated to 53.5 from 51.5. Manufacturing output inched to 51.0 from 50.2.

New manufacturing orders turned positive for the first time since February. Domestic and export demand both contributed to the gain, the survey said.

Employment across the private sector kept rising, though hiring slowed from June. Input cost inflation stayed elevated. Firms passed some of the increase to customers, keeping output price pressures in check.

Business confidence improved. Companies cited expectations of stronger demand in the second half of 2026.

The data suggests Australia's economy is gaining traction after a sluggish first half. The services sector, which accounts for roughly two-thirds of GDP, is the main driver. Manufacturing remains fragile, with output barely above the 50.0 expansion threshold.

For the Reserve Bank of Australia, the mix of faster growth and still-elevated input costs complicates the rate outlook. A Composite PMI above 52 has historically correlated with quarterly GDP growth above 0.6%, well above the RBA's estimate of potential. That argues against rate cuts in the near term.