Services PMI contraction eases

From the AIG:

The Australian Industry Group Australian Performance of Services Index (Australian PSI® ) lifted by 3.9 points to 48.9 points in September. This indicated a second consecutive month of contraction across the services sector in September, but at a slower rate (results above 50 points indicate expansion, with higher numbers indicating a stronger rate of expansion).

 Two of the five activity sub-indexes in the Australian PSI® were above 50 points and indicating expansion in September. Sales lifted almost 10 points to 53.3 and new orders increased by 6.2 points to 53.7, both recovering from their sharp drops in August.

 The other three sub-indexes were below 50 points in September. Employment (44.3) and deliveries (46.5) were almost unchanged from August. Stocks fell 3.3 points to 41.1 points, suggesting deeper stock reductions by services businesses in September.

 Four of the nine services sub-sectors in the Australian PSI® expanded in September (three month moving averages). These included personal and recreational services (57.1), health and community services (55.9), communication services (55.8) and wholesale trade (52.5). There was a mild contraction in finance and insurance (48.1) and property and business services (48.0). Retail trade dropped firmly into contraction (42.1) while accommodation, cafes and restaurants (41.4) continued a sixth month of decline. Transport and storage (33.0) was almost unchanged from August, when it reached a record low for this series.

 Respondents to the Australian PSI® said increased infrastructure investment was a positive factor for business-oriented services sub-sectors, as were record low interest rates. Consumer spending remains cautious however, so not all sub-sectors are flourishing.

The second of the PMIs to rebound from the August stall but, like the other one, no improvement in the jobs outlook. Full report.