Services slump
The fallout from the oil price shock has been swift indeed.
S&P released its flash PMI readings for Australia for the month of March, which saw the services PMI plunge from 52.8 in February to 46.6 for the month of March.
A reading of under 50 denotes contraction, and services activity represents the bulk of the Aussie economy.
With interest rates going up in February, March, and soon May, this is only going one way from here...down.
Australia is particularly vulnerable to fuel shortages, and parts of the country are already reported shortages of diesel, which can only serve to constrain economic activity.
Justin Fabo from Antipodean Macro posted the below chart showing the services sector dropping into a likely recession.
S&P reported that input price inflation rose to the fastest pace in 3 years.
Manufacturing cost inflation rose to a 3½ year high, while services price inflation rose to the highest level in over 2½ years.
Consumer inflation expectations have soared accordingly, while the latest consumer confidence survey showed the lowest single result in my lifetime!
Anecdotally, few firms are looking to actively hire in this highly uncertain environment, at a time when AI was already disrupting the tech sector, meaning that the unemployment rate is likely to rise in due course.
Bond yields fell sharply overnight as Trump posted about negotiations with Iran, but it barely seems worth adding commentary here, since whatever I post will likely already be dated by the time I hit 'Publish'.
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