Australia’s Judo Bank Services PMI misses expectations, declines to 47.1 versus 47.6 expected

• Judo Bank’s Australian Services PMI sinks to second-lowest print in 23 months.
• Australian Composite PMI also slipped to 46.9 from 47.4.

The Australian Services sector contracted once more, according to the latest Purchasing Managers’ Index (PMI) data from Judo Bank.

Despite the seasonally-adjusted figure rising from November’s 46.0 to 47.1 in December, a third consecutive reading below 50.0 points towards a full quarter of services activity contraction.

This marks the fastest pace of services contraction since the third quarter of 2021.

According to Matthew De Pasuale, Economist at Judo Bank: “The composite output index ended the year with a reading of 46.9, a slight improvement from November. Readings over the past two months suggest that while the economy is slowing down, the slowdown is not accelerating. The new orders index softened for the third consecutive month to 46.7 in December, the lowest level since late 2021. Despite households facing ongoing pressure from elevated interest rates, the output and new order indexes remain at levels consistent with the RBA's forecast soft-landing for the Australian economy.”

Market reaction

The Australian Dollar is broadly unmoved by the figures, with the AUD/USD cycling the 0.6730 level with an ongoing economic downturn in the domestic Australian economy broadly priced into market expectations already.

About the Judo Bank Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by Judo Bank and S&P Global, is a leading indicator gauging business activity in Australia’s services sector. The data is derived from surveys of senior executives at private-sector companies from the services sector. 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), employment and inflation. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Australian Dollar (AUD). Meanwhile, a reading below 50 signals that activity among service providers is generally declining, which is seen as bearish for AUD.