Australia's private sector expanded at its fastest pace in 2026 in July as new business returned to growth after four months; however, business confidence remained subdued despite easing cost pressures, according to an S&P Global survey released Friday.
The Flash Australia PMI Composite Output Index rose to 52.6 in July from 50.4 in June, marking its highest level since the start of the year and indicating a second consecutive month of private sector growth, the report said.
A reading above the 50-point threshold indicates expansion.
The Flash Services PMI Business Activity Index rose to 53 in July from 50.5 in June. The Flash Manufacturing Output Index inched up to 49.9 from 49.5, while the Flash Manufacturing PMI increased to 51.7 from 51.5.
Private sector growth was driven by services, where activity expanded at the fastest pace since January, while manufacturing posted its strongest result of the year despite little change from June, per the report.
New work across Australia's private sector rebounded in July, breaking a four-month downturn as domestic demand strengthened despite ongoing weakness in international markets.
Stronger workloads led to a slight increase in backlogged orders for the first time in five months, while mounting capacity pressures boosted hiring activity to its highest level since April across both the services and manufacturing sectors.
Business cost pressures eased in July, with input price inflation slowing to its weakest pace since February, though higher fuel, oil, raw material and wage costs continued to weigh on firms.
Manufacturers raised selling prices at a softer pace than in June, while stronger demand for services led providers to adopt more aggressive pricing, lifting the composite rate of charge inflation.
Australian businesses showed a slight improvement in growth expectations for the year ahead, but confidence remained subdued as firms continued to take a cautious outlook.