By James Glynn
SYDNEY--Australian businesses are squaring up to the challenges of an energy shock and rising interest rates supported by a rebound in services sector activity in April.
The headline seasonally adjusted S&P Flash Australia PMI rose to 50.1 in April, up from 46.6 in March.
Still, there were cracks in the data with business sentiment dropping to its lowest in two and a half years, while manufacturing also took a battering as concerns about global supply chains grew.
"The Australian private sector showed resilience as companies navigated challenges brought on by war in the Middle East," said Eleanor Dennison, economist at S&P Global Market Intelligence.
However, manufacturing supply chains have come under intense pressure due to war in the Middle East with lead times lengthening to their most marked rate since mid-2022, she added.
Greater outlays on fuel and freight also pushed cost inflation to its highest in just under four years, Dennison added.
The data come amid concerns that the Reserve Bank of Australia is set to continue raising interest rates in coming months, with inflation starting already above target before hostilities around the Strait of Hormuz broke out.
Some economists expect headline inflation to reach 5.0% in the second quarter, twice the level target by the RBA, which has already raised interest rates twice this year.
Write to James Glynn at james.glynn@wsj.com
(END) Dow Jones Newswires
04-22-26 2000ET
