The AiG Performance of Services Index for September is out and shows a small further fall to 41.9:
Activity in the services sector ended the September quarter on a low note with the latest seasonally adjusted Australian Industry Group/ Commonwealth Bank Australian Performance of Services Index (Australian PSI®) down 0.5 points to 41.9 (readings below 50 indicate a contraction in activity with the distance below 50 indicative of the strength of the decline).
This marks the eighth consecutive month that activity has contracted in the sector.
Sales and new order levels continue to be hampered by weak demand from large parts of the domestic manufacturing and construction sectors.
Businesses have also reported that activity has been affected by uncertainty in the mining sector due to the recent volatility in iron ore prices and reports of slowing growth in China.
On top of these challenging trading conditions, profit margins are being squeezed by strong input price growth, due in part to the carbon tax, and declining selling prices.
Having been roundly ignored for several years, this is one of those indexes that is going to need to turn around as the mining boom ends. It’s starting a long way behind par.
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.
