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Research Update - Weekly Summary

Written and accurate as at: Jun 26, 2020 Current Stats & Facts

The Economy

The CBA Flash PMIs indicate that business activity improved over June following the sharp contraction in activity over April and May. The reopening of the economy has taken the PMIs into expansionary territory for the first time since January 2020.It is important to note that the PMI readings measure the change in business activity on the previous month with 50 being the level that separates expansion from contraction. Whilst activity has lifted in June, the level of activity remains materially lower than its pre-COVID-19 level. Overall conditions in the private sector are still very soft, but there were a few encouraging pieces of information in the PMIs. Confidence has
improved in both the manufacturing and services sectors. In addition, the lift in both input and output prices is welcome as it suggests we are more likely to be in a period of weaker inflation rather than outright deflation.

Overseas flash PMIs told a similar story, with one important caveat. In the U.S. and Europe, the June Flash Composite Output Indices rose, indicating an improvement in direction, however as they both remain under-50 they continue to be in contractionary territory. This suggest that whilst output and demand are still falling, the speed of the decline is not as severe as occurred earlier in the year.


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