Australian Services Activity Shows Resilience Despite Record Rise in Interest Rates
Australian services activity contracted at a slower rate in January, indicating the ongoing resilience of the economy despite a record increase in interest rates over the past two years, according to Judo Bank.
Positive Start to 2024
The seasonally adjusted Judo Bank Australia Services PMI Business Activity Index saw a rise to 49.1 in January, up from 47.1 in December.
“The Australian economy has started 2024 on a positive note,” said Matthew De Pasquale, economist at Judo Bank. “With a recovery in key activity measures, a gradual decline in price indexes, and ongoing employment growth, the economy continues demonstrating resilience to the sharp rise in interest rates.”
Monetary Policy Outlook
The Reserve Bank of Australia will hold its policy meeting this week amid widespread expectations that it will signal the end of interest rate increases. However, looser monetary policy still appears to be some way off.
Labor Demand and Economic Conditions
Resilience in labor demand continues to play a vital role in moderating the slowdown in the Australian economy. The employment index for January remained above the neutral level, closely mirroring the levels observed over the past three months, added De Pasquale.
New Business Patterns
January data revealed that incoming new business for the services industry remained largely unchanged. While there were cases of lower demand due to high interest rates and softening economic conditions, the increase in new enquiries offset these instances.
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