The Australian Industry Group Australian Performance of Services Index (Australian PSI®) improved by 1.5 points to 52.9 points in November 2020 (seasonally adjusted), indicating a further improvement in conditions after a slump for much of 2020. This was the highest result for the services sectors since November 2019 (results above 50 points indicate expansion, with higher numbers indicating a stronger pace of expansion).
The Australian PSI® indicated growth in four sectors and contraction in one of the five sectors available this month. Only 'retail trade and hospitality' continued to contract. Four activity indicators were positive and one contracted in November. Sales, new orders, employment and deliveries improved as activity restrictions eased and businesses ran down their inventory levels.
Improved conditions and a boost in sales was mainly due to greater movement of goods and people as restrictions across borders and within Victoria eased. However, many businesses continue to restrict access to their sites, in keeping with their COVID-safe plans. Activity levels remained lower than pre-pandemic levels, but pent-up demand led to a clear lift for many businesses, particularly in the logistics sector. The construction sector's stimulus flowed through to supporting services businesses in business and property services and logistics. Some businesses said trade restrictions by China affected Australian exporters in November.
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Background: The Ai Group Australian PSI® is a leading indicator of services activity in the Australian economy. It is a seasonally adjusted national composite index based on the diffusion indices for sales, orders/new business, deliveries, inventories and employment with varying weights. An Australian PSI® reading above 50 points indicates that services activity is generally expanding; below 50, that it is declining. The distance from 50 is indicative of the strength of the expansion or decline. Results are based on a sample of around 200 companies each month.
