Aussie flash PMI craters into Morricession

Markit with the good news:

Australia’s private sector shrank for the first time in four months,according to Flash PMI® data, affected by the latest surge in COVID-19 infections. Private sector output and demand both declined in January which led to employment growth grinding to a halt. Meanwhile, amid the disruptions backlogged work continued to build while input price inflation rose. Business optimism was likewise affected, falling sharply at the start of the year.

The IHS Markit Flash Australia Composite Output Index* fell from 54.9 in December 2021 (final reading) to a five-month low of 45.3 in January. This marks the first contraction for Australia’s private sector following three consecutive months of growth. Private sector firms saw business activity shrink amid the climb in COVID-19 cases in Australia with operations disrupted. While manufacturing sector new orders persisted in growth, that had not been enough to keep overall new orders in expansion as demand for services was badly affected by the COVID-19

Omicron variant’s impacts. Foreign demand for Australian manufactured goods also declined at the start of the year.

As a result, employment levels were unchanged in January following four months of solid growth. Anecdotal evidence suggested that both the slowdown in demand and difficulties in hiring, across both the manufacturing and service sectors, led to the stagnation.

Houses and Holes