Australia’s services PMI for August is reported at 55.8, with the composite PMI at 55.5. This indicates the sharpest growth in the services sector in over three years, up from July’s figures of 54.1 for services and 53.8 for the composite.<\/p>\n
S&P Global notes that growth in the services sector accelerated in mid-Q3 2025, driven by strong domestic and improving external demand. The Future Activity Index points to stronger near-term growth, and employment saw an increase in August.<\/p>\n
While input costs and output charge inflation remain high, they have eased compared to July. The composite PMI reflects broad-based strength in both manufacturing and services, supporting expectations for positive GDP growth in Q3.<\/p>\n
Earlier, the Australian S&P Global Manufacturing PMI was recorded at 53.0 for August, marking its highest point since September 2022.<\/p>\n
The very strong August services and composite PMI data suggests the Australian economy is running hotter than we anticipated. This strength, seen in both domestic demand and employment, puts pressure on the Reserve Bank of Australia to reconsider its neutral stance. Consequently, the market is now pricing in a greater probability of a rate hike by year-end, a notable shift from just a few weeks ago.<\/p>\n
For currency traders, this reinforces a bullish outlook on the Australian dollar. With the AUD\/USD recently finding support around the 0.6850 mark, this data provides a fundamental reason to expect a move higher, especially as the last quarterly CPI reading in July 2025 came in at a stubborn 4.1%. The clear recovery in external demand also supports the currency, improving the nation’s terms of trade.<\/p>\n
On the equity front, ASX 200 derivatives may see mixed signals. While the strong economic activity is a positive for corporate earnings, particularly for financials and miners, the increased chance of monetary tightening could cap broad market enthusiasm. We anticipate that value and cyclical stocks will outperform growth sectors in this environment.<\/p>\n
The detail that inflation remains high, despite easing slightly, is the critical point for volatility. We saw a similar situation back in late 2022, where strong economic readings preceded a series of aggressive RBA rate hikes that caused a spike in bond yields. Option traders should therefore consider strategies that profit from increased price swings in both interest rate futures and the AUD.<\/p>\n
This powerful services report comes right after the manufacturing PMI for August hit its highest point since September 2022. The Reserve Bank of Australia, which held the cash rate at 4.35% in its August meeting, will find it difficult to ignore this broad-based economic strength. We believe positioning for a stronger Aussie dollar and higher bond yields is the prudent response over the next few weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Australia’s services sector sees sharpest growth in over three years, driven by strong domestic demand.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-30063","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30063","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=30063"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/30063\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=30063"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=30063"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=30063"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}