Business activity stabilised in Australian private sector
Staff Writer |
Business activity stabilised in the Australian private sector at the end of the first quarter of the year following a decline in February.
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Services activity continued to fall, while manufacturing growth softened.
New orders were also unchanged in March, while job creation was the slowest in the 35-month survey so far.
Relatively weak demand conditions led to softer business sentiment, with confidence around the 12-month outlook the lowest since June 2016.
The headline figure derived from the survey is the Commonwealth Bank of Australia Flash Composite Output Index, which is designed to provide timely indications of changes in output in the Australian private sector.
Readings above 50.0 signal an improvement in business activity on the previous month while readings below 50.0 show deterioration.
The Index is a GDP-weighted average of the Commonwealth Bank Flash Manufacturing Output Index and the Commonwealth Bank Flash Services Business Activity Index.
Flash indices are based on around 85% of final survey responses and are intended to provide an advance indication of the final indices, published approximately one week after the flash release.
The headline index signalled a stable picture in March following February’s decline, rising to 50.0 from 49.1.
The reading was still the second-lowest in the 35 months of data collection, however.
The service sector was again the main source of weakness in March as business activity dropped for the second month running amid reports of soft demand and a lack of confidence among customers.
While manufacturing output continued to rise, a slowdown was also evident there.
Production increased at the weakest pace since August 2016.
New orders were also unchanged in March, ending the period of expansion recorded since the survey began in May 2016.
Services new business decreased marginally, while growth in manufacturing was at an eight-month low.
On a more positive note, new export business increased across both sectors.
The rate of job creation slowed to the weakest in the survey’s history and was only marginal as companies responded to fragile demand conditions.
Manufacturing employment decreased for the first time in over two-anda-half years.
Rates of inflation of both input costs and output prices were broadly stable in March, ticking up slightly from those seen in February.
A challenging economic environment, drought conditions and the upcoming election all weighed on sentiment, which dropped to a 33-month low.
That said, a number of panellists were optimistic that a return to growth will be seen over the coming year. ■