Services sector stays positive

10-10-2011

The services sector stayed in positive territory in September despite global economic uncertainty.

The latest seasonally adjusted Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (Australian PSI) was down a slight 1.8 points to 50.3, indicating activity continued to expand in the month.

Activity expanded in five of the nine services sub-sectors with the strongest growth seen in finance and insurance and communication services. 

However, activity in the retail trade sub-sector remained depressed. Respondents noted that uncertainty and low consumer confidence levels continue to be hindering economic activity throughout the services sector.

In 3-month-moving-average terms, the Australian PSI has now been around the critical 50 point level separating expansion from contraction for five consecutive months.

Australian Industry Group Chief Executive, Heather Ridout, said: "The services sector toughed it out in September with five consecutive months of readings close to or above 50 suggesting that, overall, activity has stabilised following a prolonged period of decline. 

“Encouragingly, sales and new order levels have increased in three of the past four months underpinning the performance of the sector. 

“However, major sub sectors such as retail remain weak, which is a real concern, reflecting cautious consumers and soft commercial construction activity," Ms Ridout said.

Commonwealth Bank Senior Economist James McIntyre, said: “Whilst the situation in Europe will have some impact on the Australian economy, we expect the record terms of trade and mining investment will provide a large degree of support to the Australian economy over the period ahead."

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