The S&P Global Australia Manufacturing PMI fell to 50.6 in June from 51.0 in May, its lowest reading since February. Output declined slightly as new orders fell for the first time in five months, due to adequate client inventories and weaker market conditions. While the overall contraction in new orders was marginal, export demand dropped sharply, with panellists pointing to negative impacts from U.S. trade policy on global demand for Australian goods. Reflecting the softening activity, purchasing volumes contracted for a second straight month amid reluctance to build inventory. Both pre- and post-production inventories were depleted as goods producers responded to declining demand. Despite the slowdown, employment continued to rise, though at the weakest pace in four months, as firms added staff to manage existing workloads. The increase in labor capacity, combined with fewer new orders, contributed to a further sharp drop in backlogged work.