The S&P Global Australia Composite PMI fell to 46.6 in March, worse than initial estimates of 47, down from 52.4 in February. This marked the first contraction in private sector activity in a year-and-a-half. The decline reflected a renewed and solid reduction in services activity, alongside a slight fall in manufacturing production. Overall new orders and output decreased, while inflationary pressures intensified, with input costs and output prices rising to 39- and 31-month highs, respectively. Despite the slowdown, employment continued to expand as firms maintained staffing levels to manage workloads. Business confidence weakened, falling to its lowest level since July 2024, amid uncertainty over economic conditions and persistent inflationary pressures.