The AIG PSI (which tracks services economy activity) for May is out and shows a struggle on Main St:
KEY FINDINGS
■ Activity levels in the services sector eased slightly in May, following a solid increase in April.The latest seasonally adjusted Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (Australian PSI®) fell by 1.6 points to 49.9.
■ A solid increase in sales in May was offset by declines in employment and stock levels.
■ Respondents emphasised the influence of the multi-speed economy. A number of businesses reported that mining sector activity was boosting sales and employment, while other businesses cited the exchange rate and cautious household spending as hindering‑activity.
■ Input price growth in May remained well above the average level recorded over 2010, while growth in average selling prices and wages eased back in the month.
The full report is below and I’ll leave you to unpack sector specifics. You can see from thre master index, however, that a year long trend of declining activity has been broken. Whether it resumes growth is another point entirely. Not likely given the RBA’s trigger happy rhetoric. And just to underline how different this activity is from Australia’s old economy, here’s a graph from 2008, the last time we had a commodities boom:
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
KEY FINDINGS
