Australia's services sector expanded for a third straight month in August, supported by stronger new orders, hiring, and improving business confidence, even as rising fuel and wage costs pushed input price inflation higher, according to a monthly survey by S&P Global released Thursday.
The S&P Global Australia Services PMI Business Activity Index edged down to 53.2 in August from 53.6 in July, but continued to signal a "solid" expansion in business activity.
Transport and storage led a broad-based recovery in business activity in August, returning to growth for the first time since February as firms secured more new business and output increased, per the survey.
New business activity rose despite a fourth consecutive monthly decline in new export orders, with high fuel costs and weaker tourist numbers weighing on overseas demand.
Business confidence strengthened to a six-month high in August, buoyed by rising new orders, a strong pipeline of new business and expectations of improved activity over the next 12 months.
Service providers expanded hiring for a third straight month in August as rising workloads pushed firms to add staff, though the pace of job creation slowed from July and remained insufficient to prevent backlogs from growing, the survey said.
Service-sector input cost inflation accelerated in August, driven by higher fuel prices and wage pressures, prompting businesses to raise output prices despite a slower pace of charge increases than in July.
The Composite Output Index fell to 52.7 in August from 53.2 in July, but still signaled a solid monthly expansion in business activity across Australia's private sector.
Private-sector activity expanded in August, driven by a stronger services sector as manufacturing output edged lower, while new orders rose across both sectors and export orders returned to growth for the first time in five months.
Business confidence rose to a six-month high as firms continued to add staff, even as input cost pressures intensified and selling price inflation eased from July.