Australia Services Sector Marks Second Drop in Three Months

The S&P Global Australia Services PMI Business Activity Index dropped to 47.7 in May 2026 from a final 50.7 in the prior month, a preliminary reading showed. It was the second time of drop in three months for the service sector amid disruptions cause by the Middle East conflict.

The S&P Global Australia Services PMI Business Activity Index was revised slightly higher to 50.7 in April 2026 from 50.3 in the preliminary estimate, and up from a final 46.3 in March, which had marked the weakest reading since November 2023. A rebound in services activity was supported by sustained job creation, with firms reporting improved business conditions. However, new orders continued to fall as demand remained subdued amid higher fuel costs due to the war in the Middle East. Despite weak demand, new business from abroad ticked higher, with growth in April following a sharp decline in March. On prices, input cost inflation accelerated to the fastest pace since August 2022, driven by fuel price fluctuations. As a result, firms raised selling prices at the fastest rate since January 2023, as higher fuel costs were passed through to customers. Finally, business sentiment was unchanged from that seen in March, remaining relatively muted compared to the long-run average.

The S&P Global Australia Services PMI Business Activity Index climbed to 50.3 in April 2026 from a final 46.3 in the previous month, which had marked the weakest reading since November 2023. Flash data signaled a rebound in services activity, with firms reporting improved business conditions and stronger job creation. However, demand remained subdued, as softer client confidence and broader uncertainty continued to weigh on new business and overall sentiment.