CBA Australia Flash March PMI – Review

London, 24 March 2020 (LS News) - The Commonwealth Bank Of Australia (CBA) flash March PMI readings revealed a strong negative impact from the COVID-19 virus. The virus outbreak led to a sharp declines in business activity amongst firms in Australia.

 

The manufacturing PMI print fell to 50.1 in March from February’s 50.2 reading but the measure still stayed in expansion territory. IHS Markit noted that over the period, the depreciation of the Australian dollar led to marked increases in raw material costs which drove the fastest increase in input prices for manufacturers for 17 months. However, positive signs were shown amongst some domestic manufacturers which boosted output given the reduced flow of goods being supplied from China.

 

Meanwhile, the services sector saw the greatest impact from the COVID-19 virus as several events were cancelled. The services print fell sharply to 39.8 from 49.0 in February whilst the composite reading fell to 40.7 from 49.0 in February.

 

Commenting on the figures, CBA Chief Economist, Michael Blythe noted, “the services sector is being hit hard by the cancellation of events, general fears about social interaction and a very sharp decline in offshore demand as travel restrictions bite.”

 

With travel restrictions in place globally amid the virus outbreak, new business for the services sector diminished. The strong drop in new orders fed through to the lack of demand for workers and led to the third occasion in four months where employment fell.

 

Despite the poor services print, market observers noted the hold of the manufacturing reading in expansion territory. The Aussie dollar rallied over 2pct against the US dollar to 0.5965 on a day where commodity currencies saw some relief as the dollar broadly weakened. 

 

 

-- LiveSquawk News