The Australian Industry Group (AIG) today released the Performance of Services Index (PSI) for November, which registered the 10th consecutive month of contraction (whereby the index is below the 50-point level separating contraction from expansion), although a slowing in the rate of contraction:
According to AIG:
The lift in the level of the Australian PSI® was supported by growth in health & community services, finance & insurance, and the retail trade sub-sector, which expanded for the first time in close to 12 months. This is an encouraging though tentative sign ahead of retailers’ peak Christmas trading period.
While the Australian PSI® remains below the critical 50-point level separating expansion from contraction, the two consecutive monthly increases in the index point to an easing of adverse conditions in the services sector in the December quarter. This should help to support growth in GDP and employment.
On a seasonally adjusted basis, three sub-sectors expanded in November, up from only one in October (i.e. the activity index of the industry was above 50 points).
Health & community services, finance & insurance and retail trade all expanded in the month. This augurs well for national employment levels, since health and community services and retailing are the nation’s two largest employing industries.
Sub-sectors directly exposed to household spending reported mixed conditions during the month. On the one hand, activity in the retail trade sub-sector was reported to have picked up strongly in November while activity in the accommodation, cafes & restaurants and personal & recreational services sub-sectors declined, after tracking more strongly in early 2012.
The business-related sub-sectors were also quite mixed. In these sectors, low levels of consumer confidence, economic uncertainty, weak activity in manufacturing and construction, and the high dollar were again noted as factors contributing to soft business conditions.
The change in the individual components are summarised below:
