Australia AiG Performance of Services Index dropped -0.4 to 48.8 in June. Looking at some details, sales plummeted by -8.8 to 41.9. Employment surged 7.9 to 55.3. New orders ticked down by -0.8 to 58.9. Input prices rose 0.3 to 69.0. Selling prices rose 5.3 to 67.2. Averages jumped 10.3 to 67.7.
Innes Willox, Chief Executive Ai Group, said: “With interest rates rising for the first time in a decade, we have seen a ‘two-speed’ services sector emerge in June. Industries which are sensitive to sentiment changes – such as business & property, and personal & recreational services – declined into contraction. Less interest-rate-exposed services remained in a growth phase. With the RBA increasing rates by 50 basis points again this week, we would expect this two-speed pattern to gather pace.”
ECB accounts: A number of members want door open for a larger hike in Jul
As noted in accounts of ECB’s June 8-9 monetary policy meeting, “most members” supported to signal the 25bps rate hike at the July meeting. Starting the rate-hiking cycle with a step of this magnitude was seen as a “proportionate first step”. But “a number of members expressed an initial preference for keeping the door open for a larger hike at the July meeting”
“It was broadly agreed that the Governing Council should at this point be more specific about its expectations for the September meeting and, in particular, open the door to an increase in the key ECB interest rates by more than 25 basis points,” the accounts added.
“Looking beyond September, members widely agreed that, on the basis of the current assessment, a gradual but sustained path of further interest rate increases would be appropriate, with the pace of adjustment depending on incoming data and developments in the medium-term inflation outlook.”
Full meeting accounts here.