Australian services PMI sputters

From the AIG:


The services sector expanded for the second consecutive month in March, albeit at a mild pace. The seasonally-adjusted Australian Industry Group Australian Performance of Services Index (Australian PSI®) declined by 1.5 points to 50.2 points in March to remain above the critical 50 point level. Much of the growth was again concentrated in the health and community and financial and insurance services sub-sectors, while retail trade also expanded.

• The three-month moving average for the Australian PSI® also increased to 50.6 points this month, signalling the first expansion since April 2014. Recent results from the Australian PSI® suggest growth in Australian demand for goods and services (as measured by the ABS in the National Accounts as ‘domestic final demand’) may have picked up moderately in the 2015 March quarter.

• Three of the five activity sub-indexes in the Australian PSI® expanded (i.e. above 50 points) in March. Both the new orders and employment sub-indexes expanded for a third month while sales also returned to expansion following a brief contraction in February. However, supplier deliveries contracted in March after expanding last month while services businesses reduced their stock levels for a 10th consecutive month.

• Four of the nine services sub-sectors showed expansion this month. The very large health and community services sub-sector (57.5 points, three-month moving averages) expanded for a fifth month in March and the finance and insurance services sub-sector expanded for a third month (73.0 points). Personal and recreational services (50.4 points) also expanded and retail trade (52.6 points) expanded for the first time since September 2014. All other services subsectors contracted in March.

• Despite the benefits from a lower Australian dollar and a pickup in residential building activity over the past year, respondents to the Australian PSI® expressed ongoing concerns about weak local economic conditions, fragile consumer and business sentiment, a low appetite for investment by both the public and private sectors, as well as political uncertainties in Canberra and in New South Wales ahead of the state election.


What an awful report. Banks and aging booming. Retail and recreation luke warm and everything else going backwards. The perfect snapshot of a crotchety bubble economy.

Full report.