FX.co ★ Australia Services Sector Expands for 16th Straight Month

The S&P Global Australia Services PMI Business Activity Index recorded a reading of 50.6 in May, indicating ongoing expansion for the 16th consecutive month, albeit at its most sluggish pace in six months. This deceleration in activity growth aligns with more moderate increases in new business, as orders grew at the slowest rate observed in a ten-month period of expansion. Export demand weakened for the third consecutive month, also affected by temporary uncertainties related to elections. Input costs increased significantly—propelled by rising expenses in energy and labor—although the overall rate of cost inflation declined to its lowest level in three months. Consequently, service providers moderated the pace at which they raised output charges, with output price inflation decreasing to its lowest point since December 2020. Despite the softer demand, firms continued to increase staff levels to keep up with current workloads, resulting in the first slight reduction of outstanding business in three months. Nonetheless, confidence among service providers dipped to its lowest level since last November, reflecting concerns about global trade issues.