The Australian Industry Group Australian Performance of Services Index (Australian PSI®) bounced back into expansion territory after four months in the red.
According to latest data the index rose 3.4 points in February to 51.8 (readings above 50 points indicate expansion).
“The bounce in the services sector in February is a tentative yet positive sign that consumer confidence is strengthening,” said Ai Group Chief Executive, Innes Willox.
Sales and new orders were both stronger in February with the consumer-facing sectors of health and community services and personal and recreational services showing the most convincing signs of growth.
In contrast, the more business-facing sectors of property and business services, wholesale services, transport & storage and communications services were all weaker.
While the return to expansion is encouraging, the sector remains “fragile” and “vulnerable”, said Mr Willox.
“This should be a warning to policy makers against an excessively restrictive Federal Budget in May and highlights the room for a targeted lift in incentives for business investment,” he said.