Australia's Judo Bank Composite PMI Output Index hits four-month high of 46.9 in January

• Australia's January Judo Bank Services PMI increases to 47.9 versus 47.1 previous.
• Manufacturing PMI Component hits 11-month high of 50.3.

Australia's Judo Bank Purchasing Managers' Index (PMI) showed a welcome rebound in the PMI Manufacturing component, hitting an 11-month high of 50.3 and helping to drag the Composite PMI Output Index to a four-month high of 48.1 versus December's print of 46.9.

Despite a continued overall decline in Australia's private sector activity in January, the pace of contraction has declined, and an easing of business contractions coincides with an improvement in business confidence at the start of 2024.

According to Judo Bank's Chief Economic Advisor Warren Hogan:

“The Judo Bank Flash PMI for January provides a first look at the economy in the new year. Encouragingly, we have seen a modest improvement in business conditions in January, with a stabilisation in service sector activity and a pick-up in manufacturing output.

Business confidence has also improved, measured by the future output index, which rose to the highest level in five months in January. Excluding the spike in August last year, it is the highest reading in a year."

Market Reaction

The AUD/USD is trading tightly near the 0.6580 level as Pacific and Oceania markets gear up for the Wednesday market session.

About the Australian Judo Bank PMI

The Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by Judo Bank and S&P Global, is a leading indicator gauging business activity in Australia’s manufacturing sector. The data is derived from surveys of senior executives at private-sector companies. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the Australian Dollar (AUD). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for AUD.