• The Australian Industry Group Australian Performance of Services Index (Australian PSI®) fell 0.7 points to 51.4 in October (seasonally adjusted), marking a marginal slowing in growth from September. Australian PSI® results above 50 points indicate expansion, with higher numbers indicating stronger rates of growth.
• Four of the five activity sub-indexes in the Australian PSI® were above 50 points and indicating growth in October (seasonally adjusted), with one sub-index declining. Sales (48.1 points) fell 4.8 points into contraction while growth in new orders (51.5) and supplier deliveries (51.7) moderated. Employment (53.3) and stocks (inventory) (54.8) built up at a faster rate in October.
• The Australian PSI® showed substantial variations in conditions across the subsectors in October. Five of the nine sub-sectors expanded in October (trend) with results above 50 points, while four contracted. Activity accelerated in personal and recreational services (66.4) and property and business services (58.0) while growth across finance and insurance (55.7 points), communications services (54.9) and wholesale trade (51.2 points) moderated.
• Activity shrank at a faster rate in October in health and community services (47.1 points), transport and storage (43.3) and hospitality (accommodation, cafes and restaurants) (36.2 points and the lowest result since mid-2013). Retail trade (44.4 points) declined at a slower pace than in September (trend).
• Respondents to the Australian PSI® in the business-oriented sub-sectors noted continuing demand coming from the construction and mining sectors, predominantly in the eastern states. Respondents in retail and hospitality are reporting weak spending by consumers due to a mix of increased household electricity costs and hesitant consumers. Businesses in Western Australia still appear to be facing tougher conditions than those in the eastern states in October, although some glimmers of improvement are emerging in the west, as its boom-slump cycle starts to turn up again.
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.
