FX.co ★ Australia Services Activity Expected to Contract in March

The S&P Global Flash Australia Services PMI Business Activity Index fell to 46.6 in March from 52.8 in February, signaling the first contraction in more than two years. The downturn reflected a solid decline in services activity and a renewed drop in new business as demand weakened. Employment continued to rise, but at the slowest pace in four months, while backlogs of work were reduced for the first time this year.

Export demand grew, but not enough to prevent an overall fall in sales. Business confidence slipped to a 20‑month low, weighed down by fragile demand and economic disruptions linked to the war in the Middle East. On the cost side, both input price inflation and selling price inflation accelerated compared with February. Service providers faced their highest input costs in more than three years, and output charges rose to their highest level since August 2023.