From the AIG:
The services sector expanded again in July 2015, and more strongly than in June. The seasonally-adjusted Australian Industry Group Australian Performance of Services Index (Australian PSI® ) increased by another 2.9 points to 54.1 points this month, its highest level since February 2014 (readings above 50 points indicate expansion, with the distance from 50 points indicating the strength of expansion).
• Conditions across the services sectors have been generally positive or steady in 2015, with the Australian PSI® expanding (readings above 50 points) or holding steady (readings around 50 points) since January. Recent results from the Australian PSI® suggest growth in Australian demand for goods and services (measured by the ABS in the National Accounts as ‘domestic final demand’) may have improved modestly in the second and into the third quarter of 2015.
• All of the five activity sub-indexes in the Australian PSI® expanded (i.e. above 50 points) in July for the first time since February 2014. The sales and new orders sub-indexes were greater than 50 for a second month. Services businesses increased their stock levels for the first time in 14 months, while employment rose in July after a brief contraction in June.
• Four of the nine services sub-sectors in the Australian PSI® grew in July. The finance and insurance services sub-sector expanded for a seventh consecutive month (65.0 points, threemonth moving averages), while retail trade (53.8 points) rose for a fifth month. The wholesale trade sub-sector (50.4 points) expanded for the first time since November 2011. The property and business services sub-sector (54.5 points) also returned to growth after nine months of contraction. The other five services sub-sectors contracted in July.
• Stronger housing market activity, low interest rates and the lower dollar are supporting demand for some local services. A number of business service respondents also attributed the recent improvement in trading conditions to the small business measures announced in the 2015-16 Federal Budget. However, a weak economic outlook and low business and public investment are still constraining demand for some business services, while unsteady consumer confidence and low household income growth continue to constrain household expenditure.
My view is that right now is about as good as this cycle is going to get. Full report.
