The latest Commonwealth Bank ‘Flash’ Purchasing Managers’ Index (PMI) indicates Australia’s private sector economy reversed recent gains in August following the re-introduction of lockdowns and border restrictions in some parts of the country.
Australian business activity fell in August, primarily due to declining activity in the services sector, which experienced solid falls in demand amid renewed coronavirus restrictions in parts of Australia. While services sector activity declined for the first time in three months, activity in Australia’s manufacturing sector improved modestly in August. External demand for manufacturers continued to weaken, with new export orders declining for the seventh consecutive month and at a steep rate.
CBA’s Head of Australian Economics, Gareth Aird, said: “The decline in business activity over August is hardly surprising given the lockdown measures in Victoria. With the August composite flash PMI showing only modest contraction it is highly likely that outside of Victoria private output in the rest of Australia continued to expand over the month”.
The headline Commonwealth Bank Flash PMI Index in August was 48.8, down from 57.8 in July. Readings below 50.0 signal a deterioration in business activity on the previous month, while readings above 50.0 show improvement. Readings for the services sector fell from 58.2 in July to 48.1, while the manufacturing sector remained largely unchanged at 53.9, down from 54.0 in July.