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Australia's Service Sector Returns To Growth In June

Australia's service sector grew for the first time in five months in June amid a further easing of Covid-19 restrictions, survey data from IHS Markit showed Friday.

The Commonwealth Bank of Australia services Purchasing Managers' Index surged to 53.1 in June from 26.9 in May. The flash reading was 53.2.

A score above 50 indicates expansion. Moreover, the latest expansion was the fastest for just over one-and-a-half years.

The lifting of restrictions provided relief to the service sector as firms reopened and individuals resumed consumption. This led to a marked improvement in demand conditions.

However, despite increased capacity pressure, firms continued to reduce staff numbers in June.

Input costs advanced notably after two months of declines, with inflation linked to greater staff costs, increased fuel prices and supplier price hikes. Consequently, firms raised their selling prices for the first time in three months.

Finally, business expectations for the year-ahead outlook improved further in June, with sentiment rising to the highest in nine months.

The composite output index, which is designed to provide a timely indication of changes in business activity in the private sector economy, improved to 52.7 in June from 28.1 a month ago.

The score was slightly above the flash estimate of 52.6.

The overall upturn in the private sector was led by a similarly substantial increase in services business activity.

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