The S&P Global Australia Manufacturing PMI eased to 51.3 in July from 51.6 in June, signaling a continued but modest expansion as firms grappled with weak demand and reduced staffing levels. The slight improvement was underpinned by a return to growth in production, marking the strongest output performance since May 2022, though gains remained limited. New orders continued to decline and employment fell further, underscoring persistent demand-side weakness. Nonetheless, business confidence climbed to its highest level in over three years, buoyed by optimism surrounding future economic conditions and potential trade opportunities. Input costs rose for the first time in three months, driven by material shortages and shipping delays, yet firms largely absorbed these pressures due to strong competitive forces. As a result, factory gate prices declined for the third straight month, with manufacturers reluctant to pass rising costs onto customers.