S&P Global Data Shows Private Sector Growth in Japan and Australia

Preliminary August data from S&P Global indicates private sector expansion in both Japan and Australia, though the drivers of growth differ between the two nations. In Japan, the private sector grew at its fastest pace in six months, with the Composite Output Index rising to 53.4. This growth was led by the manufacturing sector, where demand for AI and semiconductor-related industries pushed new orders to their highest level since January 2018.

In Australia, the private sector also expanded, though the services sector remained the primary driver. The Services PMI dipped slightly to 52.9 from July's 53.6, while the Manufacturing PMI held steady at 52.0. Australian goods producers reported a slight contraction in output, citing staffing issues, cost pressures, and delivery delays, despite an improvement in export performance.

These economic trends have implications for monetary policy in both regions. In Japan, persistent price inflation and firm growth strengthen the case for the Bank of Japan to raise rates during its September 17-18 meeting. Similarly, analysts suggest the economic firmness in Australia provides the Reserve Bank of Australia with more headroom to implement further interest rate hikes.