However, investors should consider subcomponents, including employment and prices. The services sector remains a significant contributor to overall inflation. Upward trends in job creation and input prices could support consumer spending, possibly fueling inflation. A higher-for-longer RBA rate path could affect borrowing costs, disposable income, and spending.
Better-than-expected Services PMI numbers could push the AUD/USD toward $0.70. Conversely, an unexpected fall in the Services PMI could increase bets on a Q4 RBA rate cut, possibly pulling the AUD/USD below $0.67500.
Expert Views on the Australian Economy
In light of recent PMI trends, experts weigh in on potential economic impacts. Judo Bank Economist Matthew De Pasquale commented on the August Services PMI survey, stating,
“Input price pressures have maintained the significant increase they saw in July, a level that has not been seen since early 2023. As noted in the Flash release, the combination of ongoing resilience in the services sector activity, a high level of government stimulus for households, and an uptick in input price pressures provide little comfort that Australia’s inflation pressures across domestic services will continue easing through the first half of FY25.”
US Economic Calendar
Later in the session on Monday, US private sector PMIs will also draw investor interest. The US Services PMI will likely have a greater impact on US dollar demand as it accounts for almost 80% of the US economy.
Economists expect the S&P Global Services PMI to fall modestly from 55.7 in August to 55.2 in September. A larger-than-expected fall in the Services PMI could reinforce expectations of multiple Q4 2024 Fed rate cuts.
