Back
7 Jan 2015
Australia's services sector contracts for 10th straight month
FXStreet (Bali) - Australia's Dec AIG performance of services index came at 47.5 v 43.8 prior, representing the 10th month of contraction in the services sector.
Key findings
• Following two months of very weak readings, conditions in the services industries deteriorated at a slower pace in December. The seasonally adjusted Australian Industry Group Australian Performance of Services Index (Australian PSI® ) improved by 3.7 points to 47.5 points this month. This indicated the tenth consecutive month of contraction in the services industries (readings below 50 points indicate contraction).
• The three-month moving average for the Australian PSI® increased marginally to 45.0 points in December. Recent results from the Australian PSI® suggest growth in Australian demand for goods and services (as measured by the ABS in the National Accounts each quarter as ‘domestic final demand’) is likely to be very weak in the December quarter of 2014, in the range of just 1% to 2% in real terms.
• All of the activity sub-indexes in the Australian PSI® remained below 50 points (i.e. in contraction) for a third consecutive month in December. Both the sales and new orders sub-indexes contracted for a fourth month in December, while supplier deliveries and stocks levels have contracted for seven consecutive months. Services employment also contracted for a third month in December. These results suggest very weak trading conditions and a fragile outlook for the summer trading period.
• Only one of the nine services sub-sectors showed expansion this month. The very large health and community services sub-sector (55.5 points, three-month moving averages) expanded for a second month in December. Other consumer oriented services subsectors, as well as business oriented services sub-sectors, contracted again in December.
• Respondents to the Australian PSI® expressed continuing concerns about weak local economic conditions, fragile consumer and business confidence and slower growth in household disposable income. In addition, the ongoing decline in mining construction
activity and flat manufacturing investment continue to weigh down demand for related business services such as accounting, legal, personnel and administrative services
Key findings
• Following two months of very weak readings, conditions in the services industries deteriorated at a slower pace in December. The seasonally adjusted Australian Industry Group Australian Performance of Services Index (Australian PSI® ) improved by 3.7 points to 47.5 points this month. This indicated the tenth consecutive month of contraction in the services industries (readings below 50 points indicate contraction).
• The three-month moving average for the Australian PSI® increased marginally to 45.0 points in December. Recent results from the Australian PSI® suggest growth in Australian demand for goods and services (as measured by the ABS in the National Accounts each quarter as ‘domestic final demand’) is likely to be very weak in the December quarter of 2014, in the range of just 1% to 2% in real terms.
• All of the activity sub-indexes in the Australian PSI® remained below 50 points (i.e. in contraction) for a third consecutive month in December. Both the sales and new orders sub-indexes contracted for a fourth month in December, while supplier deliveries and stocks levels have contracted for seven consecutive months. Services employment also contracted for a third month in December. These results suggest very weak trading conditions and a fragile outlook for the summer trading period.
• Only one of the nine services sub-sectors showed expansion this month. The very large health and community services sub-sector (55.5 points, three-month moving averages) expanded for a second month in December. Other consumer oriented services subsectors, as well as business oriented services sub-sectors, contracted again in December.
• Respondents to the Australian PSI® expressed continuing concerns about weak local economic conditions, fragile consumer and business confidence and slower growth in household disposable income. In addition, the ongoing decline in mining construction
activity and flat manufacturing investment continue to weigh down demand for related business services such as accounting, legal, personnel and administrative services