Services PMI slows

For what it’s worth, from the AIG:

 The Australian Industry Group Australian Performance of Services Index (Australian PSI®) dropped by 1.5 points to 51.5 points in May (seasonally adjusted) marking the eighth month of expansion or stable conditions for the sector. 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® indicated growth in May (seasonally adjusted). Sales increased but at a slower pace than April, at 52.5 points, new orders dropped to 52.8 points and the stocks index rose by 6.6 points to 53.6 points, moving from contraction into growth. Supplier deliveries experienced stable conditions (50.2) while employment fell into contraction at 49.2 from expansion in April.

 Three of the larger sub-sectors expanded in the Australian PSI® in May (trend data) with results above 50 points. Property and business services continued to grow strongly in May, at 56.8 points. The hospitality sector (accommodation, cafes and restaurants) rose by 2.5 points to 54.5 points while the wholesale trade sub-index reduced slightly to 53.7. Transport and storage was stable at 50.6 points, a similar result to April.

 Finance, retail trade, health and community services and communications services shrank at similar rates to the previous month. Personal and recreational services fell by 3.4 points to 43.9 points in May, indicating a faster rate of contraction.  Some respondents to the Australian PSI® reported favourable conditions due to stronger demand from government, the agriculture sector and infrastructure projects.

 In the weaker sectors, respondents reported lower consumer confidence and spending, plus some reduction in demand from the mining sector and from business customers. Weaker demand was noted especially in Western Australia and South Australia in May.

Full report.