Australia's PMI Slips to 52.5 in August, Suggesting Modest Economic Growth

Australia's private sector growth continued in August, albeit at a slightly softer pace, according to the latest flash estimate of the Composite Purchasing Managers' Index (PMI). The index eased to 52.5, down from 53.2 in July, marking the 17th consecutive month of expansion.

The services sector remained the main engine of growth, with its PMI at 52.2, down from 52.8 in July. Manufacturing also remained in growth territory, but at a more subdued pace, with its PMI at 49.5, up slightly from 49.4.

Economists note that the PMI reading, while softer, still suggests the economy is avoiding a sharp downturn. 'The composite PMI at 52.5 is consistent with GDP growth of around 0.4% in the third quarter,' said Sarah Hunter, chief economist at KPMG Australia.

However, the data also highlights ongoing challenges for the Australian economy, including persistent price pressures and weak global demand. The Reserve Bank of Australia (RBA) has held the cash rate at 4.35% since November 2023, and market expectations for a rate cut have been pushed back to mid-2026.