Global private sector activity showed tentative signs of stabilization in April 2026, but the recovery remains uneven and increasingly threatened by resurgence in cost pressures linked to the war in the Middle East. Flash PMI data from Australia and the United States tell a broadly similar story: growth is holding above contraction territory, yet the inflation risks building beneath the surface are becoming harder to ignore. 

In Australia, the Composite PMI Output Index rebounded to 50.1 in April from a sharp contraction of 46.6 in March, narrowly re-entering expansion. As shown in Exhibit 1, the recovery was driven entirely by services, where business activity lifted to 50.3 after contracting to 46.3 the prior month. Manufacturing remained in contraction for a third consecutive month, with output falling at its sharpest rate since late 2024. Total new business declined for a second month running as domestic demand stayed soft and business confidence retreated to near two-and-a-half year lows. The services rebound is real but tentative activity barely crossed the neutral threshold and export orders grew only marginally.