Australia’s composite PMI was revised up to 48.7 in May 2026 from a preliminary 47.8, but remained below the final 50.7 recorded in April. This signaled the second contraction in three months, as both services and manufacturing activity weakened amid the prolonged conflict in the Middle East.
Services activity contracted for the second time in three months, while manufacturing output fell for the fourth consecutive month. Total new orders declined at the sharpest rate in almost two and a half years, highlighting softer demand linked to the Middle East war. Employment decreased for the first time in 16 months, with job losses the most severe in nearly five years.
Input costs continued to rise, driven by higher fuel prices, although overall cost inflation eased compared with April. Selling price inflation also moderated from April’s 39‑month high. Business confidence dropped to its lowest level since November 2023, reflecting mounting concerns over a broader economic downturn, elevated prices, and rising interest rates.
