Insights 
VT 
Manufacturing And Services PMI
Australia’s preliminary June 2025 manufacturing PMI remains at 51.0, unchanged from May. This indicates stability in the manufacturing sector.
The flash services PMI has seen an increase, reaching 51.3 compared to 50.6 in May. This reflects growth and improvement within the services sector.
The composite PMI, which combines manufacturing and services, has risen to 51.2 from May’s 50.5. This suggests overall expansion in economic activity across sectors.
The figures released show that manufacturing activity in Australia has held steady, with the preliminary June 2025 reading staying flat at 51.0. Since a PMI above 50 points to expansion, that stability is telling. It implies that while growth hasn’t accelerated, the sector hasn’t contracted either. We interpret this as a period of consolidation following previous fluctuations.
More notably, the flash services PMI edged higher to 51.3, up from 50.6 in May. That’s not a minor detail. It points to increasing demand and possibly an uptick in consumer or business spending within the sector. The move upward, while contained, builds confidence that this area of the economy continues to pick up pace, albeit gradually.
Market Reactions and Strategy
When you combine services and manufacturing, the composite PMI gives a clearer view of direction. It has climbed to 51.2, showing that general business conditions across the board are slightly better than last month. It may not be a leap forward, but it’s directional growth and likely shows that underlying momentum in activity is building.
From where we sit, these data points offer clearer guidance. They show that output isn’t falling, and one key part of the economy – services – is gaining steam. For those watching broader risk indicators, that puts more weight on forward-looking components of these surveys, like new orders and employment, to confirm whether this is a sustained path or just a brief lift.
We note that there had been some hesitation earlier in the quarter, particularly due to high borrowing costs and margin pressures. These latest numbers may ease those concerns somewhat. When that happens, pricing pressure often needs to be recalibrated. As we track how that adjustment plays out, short-term volatility might increase, especially as expectations realign across asset classes.
In the past, when composite indicators move just above 51 for consecutive months, near-term pricing has shown measurable shifts in sensitivity. That matters. Implied volatility often becomes more reactive to forward earnings or inflation-linked input costs. Any breakout or sustained move in the PMIs in the months ahead would likely prompt markets to rebase rate outlooks or push for earlier repricing along the curve.
Given this backdrop, a sustained PMI track above the 50 mark tends to lend strength to cyclical exposures, often triggering a shift in sentiment around policy moves. Short-term activity expectations, especially within leverage-sensitive instruments, become more directionally traded during such windows. We tend to see repositioning accelerate when that happens.
We’ll monitor how pricing in front-end derivatives adjusts over the next few sessions. Often, performance in contracts tied to volatility or growth outlooks leads early sentiment. We’ve also observed that when services improve without simultaneous manufacturing contraction, directional bets often become larger.
With the data leaning positive, it would be reasonable to expect increased interest in trading strategies that benefit from upward momentum in activity indicators. But timing matters more than ever during slower-paced expansions. Traders positioning around these numbers, based on our experience, tend to act faster when month-on-month improvements coincide between services and composite indices.
