Australia Services Activity Nears Stabilisation in June

The S&P Global Flash Australia Services PMI Business Activity Index rose to 49.9 in June 2026 from 48.7 in the previous month. The flash reading indicated that the services sector moved closer to stabilization but remained slightly in contraction territory. Nonetheless, the improvement helped lift the Composite Output Index to 49.8 from 48.7, signaling broadly stable private sector activity. However, new orders continued to decline for a fourth straight month amid market uncertainty, while export demand also weakened. Business confidence fell to its lowest level since the pandemic. Employment returned to growth, but firms reduced backlogs at the fastest pace in over two years. Meanwhile, input cost and selling price inflation eased further despite persistent fuel and transportation cost pressures.

The S&P Global Australia Services PMI Business Activity Index fell to 48.7 in May 2026 from 50.7 in April, revised slightly higher from initial estimates of a 47.7 contraction but marked the second decline in activity in the past three months. The downturn was driven by weaker demand, market uncertainty, and rising fuel costs linked to the ongoing Middle East conflict, which weighed on business conditions across several industries. New business declined for a third straight month and at the fastest pace in nearly two-and-a-half years, as higher prices and rising interest rates dampened demand. Export orders also fell, while companies reduced staffing levels for the first time since January 2025 amid softer workloads. Inflationary pressures remained elevated, with fuel costs continuing to push up input prices and prompting firms to pass higher expenses on to customers through increased selling prices. Meanwhile, business confidence weakened to its lowest level since November 2023.

The S&P Global Australia Services PMI Business Activity Index fell to 47.7 in May 2026 from a final 50.7 in the previous month, preliminary estimates showed. The reading marked the second contraction in three months for the services sector, as the ongoing Middle East conflict continued to disrupt business conditions and weigh on demand. Activity also fell below the sector’s long-run growth trend, with new orders declining solidly amid a weaker demand environment. In response, firms returned to workforce cutbacks after prior signs of stabilization. On the inflation front, cost pressures intensified further, although the pace of increase remained considerably softer than in the manufacturing sector.