So much for that “Booming Christmas” we heard so much about. From AiG
The services sector finished 2013 in negative territory with the Australian Industry Group Australian Performance of Services Index (Australian PSI®) down 2.8 points to 46.1 (readings below 50 represent contraction in activIty, with the distance from 50 indicative of the strength of the decrease).
Employment fell to 47.7, new orders (43.0) fell by 3.6 points and sales – while fractionally higher than in November at 47.7 – also remained below 50. While the Christmas rush did see retail trade record its strongest reading since April, rising by 2.4 points to 48.6, it also remained in the red. Finance & insurance services (65.5) edged 0.9 points higher and was the strongest performing sub-sector.
Ai Group Chief Executive, Innes Willox, said: “The December Australian PSI® result stunted the green shoots that appeared following the federal election with the services sector retreating from the brink of recovery in December. While sales continued to claw back towards positive territory, both employment and new orders slipped further into the red bringing into question the tentative build in optimism that characterised the previous couple of months. Continuing weakness in the important services sector underlines the fragility of the domestic economy at a time when a lift in non-mining related activity is needed to meet the challenge of rebalancing in the wake of the mining investment boom. If the services sector does not recover quickly, pressure will build on the Reserve Bank to reduce interest rates further and the task of fiscal consolidation will be made more difficult in the shorter-term,” Mr Willox said.
Australian PSI® – Key Findings for December:
- The December Australian Industry Group Australian Performance of Services Index (Australian PSI®) was 2.8 points weaker at 46.1 (readings below 50 indicate a contraction in activity).
- All five activity sub-indexes: sales, new orders, employment, stocks and supplier deliveries, were below 50 in December.
- Only the finance & insurance (65.5) and health & community services (58.0) sub-sectors expanded in the month.
- The communications sub-sector was the worst performing at 29.2. Respondents in this area noted the uncertainty around the NBN is affecting their forward contracts.
- Selling prices were weaker at 43.5.
- Input prices (60.3) and wages (58.7) remained high.
Full report below