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Services sector slows

07-12-2010
by 
in 

After returning to growth in October, the services sector slipped backwards again the following month.  

The latest Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (Australian PSI) fell 4.5 points to 46.2 in the month, continuing the softness that has characterised the sector for all but two months of 2010.

Respondents to the survey cited November's interest rate rise as a key contributor to the negative results in eight of the nine sub-sectors, including retail trade.  

Sales across the services sector fell 9.7 points in the month to 45.6.

Australian Industry Group Chief Executive, Heather Ridout, said: "The weakness evident in the Australian PSI points to a sector continuing to battle fragile consumer and business spending which has been dampened by rising interest rates.  

“The tourism-related sub-sectors of accommodation, cafes and restaurants and personal and recreational services are also battling the headwinds of the strong Australian dollar.

"The softness in new orders, which is particularly evident in the retail services sub-sector, together with the ongoing run-down in stocks, is especially disappointing in the lead-up to the Christmas period.  Against the difficult background of a sector struggling to make sales, the pick-up in the wages sub-index over the past couple of months is of considerable concern," Ms Ridout said.

 

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