The AIG PSI Index for July is out this morning and makes interesting reading with the services sector still in recession, but without the same collapse seen in Monday’s manufacturing gauge:
■ The services sector contracted in July, with the latest seasonally adjusted Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (Australian PSI®) rising by 0.3 points to 48.8 (readings below 50 indicate a contraction in activity).
■ The Australian PSI® has remained below the critical 50 point level separating expansion from contraction for 10 of the past 12 months.
■ Nonetheless, in 3-month-moving-average terms, the Australian PSI has picked up since the start of the year.
■ This has reﬂected gradual increases in the sales and new orders components of the index, with new order levels stabilising in the services sector over recent months.
■ The improvement in sales and new order levels has been largely concentrated in Queensland following recent natural disasters.
■ In July, Western Australia and Queensland recorded the strongest service sector activity levels, which may reﬂect activity in the resources sector
Truth is, I’m not sure how reliable this index is. The above chart shows Australian services in recession all of last year as well, and recent firming of activity which seems to me the reverse of all other data.
Still, the index may be useful in gauging infra-sectoral shifts and on that basis here’s the chart:
Big declines for retail and wholesale trade (which it will be interesting to compare with the ABS Retail Trade number today) and big gains for transport, property and dining out. Hmmm, yes on retail but I’m not seeing the other jumps in broader data.
Jury’s out on this index.