Services PMI flops into expansion

From AIG:

 The Australian Industry Group Australian Performance of Services Index (Australian PSI® ) lifted by 1.6 points to 50.5 points in October. This marked a return to stable conditions after two months of contraction in August and September (results above 50 points indicate expansion, with higher numbers indicating a stronger rate of expansion).

 Three of the five activity sub-indexes in the Australian PSI® were above 50 points and indicating expansion in October. Employment lifted into positive territory, rising 8.6 points to 52.9; new orders fell 1.4 points to 52.3 points and sales dropped by 2.2 points to 51.1 points.

 Stocks (up 0.6 points to 41.7 points) and supplier deliveries (up 1.7 points to 48.2 points) continued to decline, but at a slower pace in October.

 Four of the nine services sub-sectors in the Australian PSI® expanded or were stable in October (three month moving averages). Health and community services (down by 2.3 points to 53.6), personal and recreation services (down by 3.8 points to 53.3) and wholesale trade (down by 0.4 points to 52.1) all expanded in October but at a slower rate. Finance and insurance improved by 2.2 points to be broadly stable over the month, at 50.3 points. Communication services (49.7 points) and property and business services (49.9 points) were also broadly stable in October. Retail trade (46.2 points), accommodation, cafes and restaurants (39.3 points) and transport and storage (37.9) continued to contract.

 Respondents to the Australian PSI® noted that general business confidence improved and that some promotional campaigns had helped to increase new orders. Negative factors over the past few months such as the Federal election and poor weather seem to have passed.

Full report.