The S&P Global Australia Services PMI Business Activity Index fell to 47.7 in May 2026 from a final 50.7 in the previous month, preliminary estimates showed. The reading marked the second contraction in three months for the services sector, as the ongoing Middle East conflict continued to disrupt business conditions and weigh on demand. Activity also fell below the sector’s long-run growth trend, with new orders declining solidly amid a weaker demand environment. In response, firms returned to workforce cutbacks after prior signs of stabilization. On the inflation front, cost pressures intensified further, although the pace of increase remained considerably softer than in the manufacturing sector.