• The Australian Industry Group Australian Performance of Services Index (Australian PSI®) fell 0.9 points to 52.1 in September (seasonally adjusted), signalling a marginal slowing in growth from August. Australian PSI® results above 50 points indicate expansion, with higher numbers indicating stronger rates of growth.
• All five of the activity sub-indexes in the Australian PSI® were above 50 points and indicating growth in September (seasonally adjusted), but four of them grew at a slower pace than in August. Sales (52.9 points), new orders (51.9) and employment (51.4) growth moderated while stocks (inventory) (51.8) built up at a slower rate. Supplier deliveries (52.6) returned to expansion. Capacity utilisation in the Australian PSI® fell to 77.1% of available capacity being utilised across the services sector in September.
• The Australian PSI® showed a marked variation in results across the sub-sectors in September. Six of the nine sub-sectors expanded in September (trend) with results above 50 points. Activity accelerated in finance and insurance (63.7 points), personal and recreational services (62.9), communications services (58.6) and health and community services (52.5 points). Wholesale trade (56.8 points) grew at about the same rate as in August. Growth in property and business services (52.4) decelerated.
• Reluctant consumer spending saw activity shrink at a faster rate in September in retail trade (43.1 points), while the index for the hospitality sub-sector (accommodation, cafes and restaurants) fell by 3.5 points to a record low of 35.7 points. Transport and storage slipped back into contraction at 48.7 points.
• Respondents to the Australian PSI® in the business-oriented sub-sectors noted positive demand coming from the construction and mining sectors, predominantly in the eastern states. Respondents in retail and hospitality are reporting reduced spending by consumers due to a mix of increased household electricity costs, flat income growth, and relatively poor consumer confidence. Businesses in Western Australia still appear to be suffering tougher conditions than those in the eastern states in September.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
