The services sector recorded a lift in activity in January, following three consecutive months of decline, according to the latest industry data.
The Australian Industry Group (AiGroup)/Commonwealth Bank Australian Performance of Services Index (Australian PSI) was 2.9 points stronger at 51.9 in January (readings above 50 indicate an expansion in activity).
Strong growth in accommodation, cafes and restaurants (56.4), finance and insurance (67.5) and personal & recreational services sub-sectors (66.6) drove the positive result. The remaining sub-sectors contracted – highlighting the ongoing patchiness of the services sector. In six of the nine sub-sectors, a majority of businesses reported deeper discounting of selling prices compared to a year ago.
"The lift in services sector activity is a welcome change from the contraction in the sector in the last quarter of 2011, said Australian Industry Group Director Public Policy, Dr Peter Burn.
“The return of key sectors directly exposed to household spending to positive territory provides a tentative sign that the easing of interest rates towards the end of 2011 may have lifted consumer confidence despite the dampening stream of news coming from Europe. Overall, however, the services sector remains patchy and continues to face strong headwinds including from the strength of the dollar and flat labour market conditions," Dr Burn said.
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