Australia's private sector posted only moderate expansion in September as a fresh decline in export business curtailed growth in overall new orders.

The headline seasonally adjusted S&P Global Flash Australia PMI Composite Output Index fell to 50.8 in September from 52.7 in the previous month, the index provider said Wednesday.

While the latest reading is above the 50 mark that separates expansion from contraction, it also marks the weakest growth rate across the third quarter, driven by softer demand particularly in the manufacturing space.

The overall volume of new business improved for a third straight month, although the September pace of expansion was the slowest in this period, held back by a renewed decline in new manufacturing orders. At the same time, new export orders slid for the fifth time in six months, also due to weakness in manufacturing, S&P Global said.

The Flash Australia Manufacturing PMI reading fell to 49.3 in September from 52 in August, while the Flash Australia Manufacturing PMI Output Index retreated further into contraction territory at 46.4, down from 49.6.

Services was a key growth engine, but even in this sector, the upturn was less pronounced as the Flash Australia Services PMI Business Activity Index fell to 51.4 from 53.2 in August.

There was more bitter news on the price front, as the rate of input price inflation moved up to its highest level in three months, and the rise in output charges was more pronounced than in August.

The results coincide with business confidence deteriorating to its weakest in three months, falling further below the series average in September amid concerns related to cost pressures, market demand, and customer retention. This led to a reduction in private sector employment across Australia for the first time since May.