• Australian Industry Index: -12.5 vs -11.9 prior (-0.6 change)

• Manufacturing PMI: -18.0 vs -21.6 prior (+3.6 change)

• Construction PMI : -18.7 vs -8.4 prior (-10.3 change)

While the S&P Global data showed expansion in the services sector, the Ai Group data paints a much darker picture of the industrial side of the economy. The headline index slid further into contraction, sitting at -12.5.

The headline story here is the collapse in construction. The sector’s index plunged 10.3 points to -18.7. Respondents cited “weak investment in smaller projects” and a shrinking tender pipeline as key drivers.

Manufacturing is technically “recovering,” rising 3.6 points, but at a reading of -18.0, it remains deeply in negative territory.

“Employment, new orders and input volumes all weakened as the demand outlook softened at the end of the year,” the report said.

The input price indicator jumped 6.3 points and that comes just as the RBA’s Bullock talks about a surprise in inflation to the upside.

The overall look is some kind of K-shaped economy with services on top and manufacturing on the bottom but both are fighting renewed inflation.