Australia Composite PMI Signals Modest Recovery

Australia’s S&P Global Australia Composite PMI rose to 50.1 in April 2026 from a final 46.6 in March, according to flash data, signaling a marginal return to growth. There was a rebound in services activity while manufacturing output shrank at a steeper rate, as firms grappled with disruptions linked to the Middle East conflict. Export orders continued to grow, but only modestly, helped by sales to North America, Asia, and New Zealand. However, total new business fell for a second straight month amid elevated client uncertainty. Employment growth picked up, allowing firms to make inroads into backlogged work. On the cost side, input price inflation accelerated for a third month, reaching its highest since August 2022, due to rising fuel and shipping costs. Part of this pressure was passed on to customers, with output price inflation reaching a 3-1/2-year high. Finally, business sentiment weakened to its lowest level in nearly 2-1/2 years, reflecting concerns over costs and demand.

The S&P Global Australia Composite PMI fell to 46.6 in March, worse than initial estimates of 47, down from 52.4 in February. This marked the first contraction in private sector activity in a year-and-a-half. The decline reflected a renewed and solid reduction in services activity, alongside a slight fall in manufacturing production. Overall new orders and output decreased, while inflationary pressures intensified, with input costs and output prices rising to 39- and 31-month highs, respectively. Despite the slowdown, employment continued to expand as firms maintained staffing levels to manage workloads. Business confidence weakened, falling to its lowest level since July 2024, amid uncertainty over economic conditions and persistent inflationary pressures.

The S&P Global Flash Australia Composite PMI fell to 47.0 in March from 52.4 in February, signaling a contraction for the first time in eighteen months as demand conditions deteriorated. Services activity entered a downturn, with the Services Business Activity Index at 46.6 in March compared with 52.8 in February, while the Manufacturing PMI slipped to 50.1 from 51.0 as both goods and services new business growth cooled and overseas orders for manufactured goods rose at the strongest pace in over three-and-a-half years. Business sentiment remained positive but weakened to its lowest since mid 2024, and employment accelerated as firms continued to hire staff albeit at a softer rate than the previous month, while outstanding workloads were depleted for the first time in 2026. Input cost pressures and selling price inflation intensified from February, with manufacturing cost rises noted as a three-and-a-half year high and charges at their highest since August 2023.