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Australia's Private Sector Stabilizes in April as Services Rebound

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Australia's private sector activity stabilized in April after March's decline, as a modest recovery in services was offset by continued weakness in manufacturing amid soft domestic demand, rising cost pressures, and supply chain disruptions linked to Middle East tensions, according to a survey by S&P Global released Thursday.

The Flash Australia PMI Composite Output Index rose to 50.1 in April from 46.6 in March, moving above the neutral threshold as renewed growth in services activity offset a faster decline in manufacturing output, the report said.

A reading above the 50-point threshold indicates expansion.

The Flash Services PMI Business Activity Index rose to 50.3 in April from 46.3 in March. The Flash Manufacturing Output Index edged down to 48.2 from 49.4, while the Flash Manufacturing PMI increased to 51 from 49.8.

New business at Australian firms fell for a second consecutive month in April as geopolitical tensions weighed on client confidence and domestic demand, even as modest gains in export orders offered a partial offset, per the report.

Business confidence slipped to its weakest level in nearly two and a half years in April amid rising cost and demand pressures, even as a pickup in private hiring helped firms clear backlogs at the start of the second quarter.

Private sector inflation in Australia accelerated in April to its fastest pace since August 2022, as higher fuel and shipping costs drove up input prices and businesses passed on more of the burden to customers than at any time in three and a half years, the report said.

Australia's manufacturing sector remained in contraction in April, with production falling for a third consecutive month and output declining at its fastest pace since late 2024, even as job and inventory reductions eased slightly.

Manufacturers faced the sharpest supply chain disruption since mid-2022 in April, as Middle East conflict-driven shipping delays pushed input delivery times higher and drove inflation in both costs and selling prices to multi-year highs.

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