The S&P Global Australia Services PMI Business Activity Index declined to 48.5 in October 2026 from 51.9 in September, slipping below the 50.0 neutral threshold for the first time since May and reaching a seven-month low. Nonetheless, the reading beat market expectations of 47.8. The downturn was driven by slower growth in new business and various operational constraints. Even so, overall new work continued to rise, supported by stronger foreign demand amid increased overseas interest and a pickup in tourism activity. Service providers also returned to hiring after having reduced headcount at the end of the third quarter.
At the same time, higher fuel, freight, labour and general operating expenses pushed input cost inflation to a five-month high. Output charges were raised at the fastest rate in three months, surpassing the long-run survey average. Despite intensifying cost pressures and softer business activity, firms remained optimistic, expecting new projects and growth initiatives to support stronger sales over the year ahead.
