Judo Bank Services PMI

What is Judo Bank Services PMI?

The Judo Bank Australia Services PMI is a Purchasing Managers' Index survey of monthly change in private services activity. S&P Global compiles it for Judo Bank in a series running since May 2016, first sponsored by Commonwealth Bank, then by Judo Bank since 2023. The panel covers around 400 services firms, stratified by sector and workforce size to reflect each sector's share of GDP. It is not official ABS data or manufacturing activity, but a leading signal for GDP, employment and inflation.

When is it released and what happens each release?

Survey replies come in during the second half of each month and report change on the previous month. The flash estimate lands in roughly the third week of the reference month. The final result follows in the first week of the next month, around 9 am Sydney time. Release days shift with weekdays and holidays, and the time label switches between AEST and AEDT.

Flash covers the composite, manufacturing and services headlines, while the final adds the full services sub-indices. Final survey replies are never revised, though seasonal factors can be, and the final replaces the flash. Readings above 50 are bullish for the Australian dollar and readings below 50 are bearish.

What moves Judo Bank Services PMI?

Services activity moves with demand, backlogs, staffing, costs, prices and expectations.

• Business Activity: activity volume versus the previous month, taken from one question as the headline.
• New Business and New Export Orders: order volumes at home and abroad; exports can fall while total orders grow.
• Outstanding Business: work received but not yet done, a guide to near-term activity.
• Employment: staffing levels, which can rise to clear backlogs even when demand is soft.
• Input and Output Prices: cost burdens such as wages, fuel and exchange-rate effects, plus fees charged, which can fall as costs rise.
• Business Expectations: whether firms expect more, less or the same activity in 12 months.

In July 2020 the headline rose to 58.2 from 53.1, with new business growing at its fastest pace in 3 years. New export orders stayed below 50 for a sixth straight month, so foreign demand shrank while domestic demand surged. Firms cut selling prices to below 50 even though input costs stayed above 50 on wages, fuel and a weaker exchange rate. Backlogs rose a second straight month and expectations stayed above 50, down from June, hiding weak exports and thin margins behind a strong headline.

How is Judo Bank Services PMI calculated?

1. Survey: Each month the panel reports whether each variable is higher, unchanged or lower than the month before.
2. Diffusion index: Each variable becomes an index: H plus 0.5 times S, where H is the share replying higher and S the share replying unchanged. For example, 30% higher, 50% unchanged and 20% lower gives 55.0, an expansion. By contrast, 20% higher, 55% unchanged and 25% lower gives 47.5, a contraction.
3. Range and neutral level: Each index is seasonally adjusted on a 0 to 100 scale, where 50 means no change. The further from 50, the faster the rise or fall.
4. Services headline: The seasonally adjusted Business Activity Index is the headline, drawn from one question on activity such as gross income or chargeable hours.
5. Manufacturing contrast: The manufacturing headline is a weighted mean of new orders 30%, output 25%, employment 20%, delivery times 15% inverted and stocks 10%.
6. Flash, composite and revisions: Flash uses about 85% to 90% of replies and lands about a week before the final. The Composite Output Index is a GDP-weighted mean of manufacturing output and services activity.

Key point: The services headline is the Services Business Activity Index. It is not official ABS data and cannot be compared with the manufacturing headline or the composite.