Australia's Judo Bank Purchasing Managers Index (PMI) Composite rose to a 24-month high of 53.6 in April compared to the previous month's 53.3. The Australian private sector ticked up into an accelerated pace of growth in the second quarter bolstered primarily by Services sector growth.
Key highlights
Australia's Manufacturing PMI Output rose to an eight-month high of 49.1 compared to March's 45.7, brushing off a 2-month low of 54.2 in the Services Business Activity compared to March's 54.4.
According to Judo Bank's Chief Economic Advisor Warren Hogan, "Over the last three months, the PMI results have pointed to a cyclical recovery in the Australian economy in 2024 following a consumer-led slowdown in 2023. While this is great news for the Australian economy, these results are stronger than what the RBA is expecting, suggesting that the economy is beginning to wander off their ‘narrow path’."
Hogan continued, "These results are inconsistent with interest rate reductions at any stage in the foreseeable future and raise the risk that the RBA may have to start hiking again at some stage over the back half of 2024.”
Market reaction
The AUD/USD is trading steadily in the early Tuesday market session, testing the waters near 0.6450.
About Australia's Composite Judo Bank PMI
The Composite Purchasing Managers Index (PMI), released on a monthly basis by Judo Bank and S&P Global, is a leading indicator gauging private-business activity in Australia for both the manufacturing and services sectors. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the Australian private economy is generally expanding, a bullish sign for the Australian Dollar (AUD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for AUD.
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