Australian November Services PMI 46.0 (prior 47.9)

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Australian November Services PMI 46.0 (prior 47.9)

Judo Bank / S&P Global November Services PMI comes in at a dismal 46.0, which is its  lowest reading (outside of periods of lockdown during the pandemic) in the survey's 8-year history

• prior 47.9

Composite is 46.2

• prior 47.6

Last week we had the flash reading for manufacturing and services

• Australian preliminary PMI for November: Manufacturing 47.7 (prior 48.2)

Followed by the final for the November manufacturing PMI:

• Australian November Manufacturing PMI 47.7 (prior 48.2)

Key points made in today's report:

• Incoming new business declines at fastest rate in
  over two years
  
• Marginally faster job creation recorded
  
• Price pressures intensify

Commentary from the report, in brief:

• "Complicating the economic picture was an improvement in the
  employment index in the services sector, indicative of continued
  strong demand for labour. A unique feature of the current cycle
  has been the resilience of labour demand despite the slowdown
  in overall activity. This looks to be more than the normal process
  of labour hoarding that occurs at the start of a cyclical downturn
  in economic activity.
  
• "While the RBA will welcome the further slowdown in business
  activity in November, the strong employment index and an
  increase in the price indexes is likely to keep them alert to inflation
  risks in 2024. Specifically, the RBA will need to remain attentive to
  the risk that inflation does not fall as quickly or by as much as they
  would like to see.
  
• "Both the input and output price indexes increased in November
  and remain above levels consistent with the RBA's inflation target.
  This is consistent with sticky domestic inflation recorded by the
  Australian Bureau of Statistics in October where, excluding the
  impacts of Government rent subsidies, another strong increase in
  domestic inflation was recorded.
  "These results will most likely give the RBA Board further
  confidence that the economy is slowing into the end of 2023
  but provides little comfort that inflation pressures will materially
  decline further over the first half of 2024."

Bolding is mine. The RBA meet today but this is not going to shift them from an on-hold decision. If inflationary pressures are reflected in official data then further hikes are likely. February is the next meeting after today and, at this stage, it's a live meeting.

Earlier previews of today's meeting:

• Reserve Bank of Australia preview - to keep the cash rate on hold, retain tightening bias

• RBA's December decision: cash rate likely to hold, questions arise for future increases
• RBA to keep cash rate unchanged next week - Reuters poll

The decision will be announced at 2.30pm local time in Sydney:

• 0330 GMT
• and 2230 US Eastern time (on Monday, 4 December 2023)

From the RBA website, the current cash rate inflation data.

                This article was written by Eamonn Sheridan at www.forexlive.com.

Source: Australian November Services PMI 46.0 (prior 47.9)

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