Australia’s manufacturing and service sectors both enjoyed strong activity in June with upbeat demand encouraging more hiring and bolstering optimism on the future, according to a new survey out on Monday. The inaugural Commonwealth Bank and IHS Markit Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 56.2 in June, from 55.9 in May and putting it well above the 50.0 threshold between expansion and contraction. Its measure of services picked up to 57.0, from 54.8 in May, with 70 percent of respondents predicting faster growth for the year ahead.
Pressure on capacity prompted manufacturers to add jobs in the month, with the employment index near a five-month peak. Around two-thirds of respondents expected to raise output in the year ahead. “The pressure on capacity evident in the survey responses is a positive indication for further jobs growth and brings us a step closer to the long-awaited lift in business capex,” said CBA chief economist Michael Blythe. “It may also signal an incipient turn in what has been a very benign inflation backdrop in recent years.”