Australian PSI: Lockdowns stall services industries' activity again in September

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Ai Group Chief Executive, Innes Willox, said: "Restrictions associated with the delta outbreaks in south eastern Australia were the major contributor to the continued contraction of the Australian services sector in September. Retail trade & hospitality dominated the downturn while business & property services also contracted as did personal & recreational services. The logistics sector saw competing forces balance gains and losses in the steady overall performance. Despite lower sales and a further contraction in new orders, employment held up pointing to an expectation that activity will rise as restrictions are eased. While predictions are highly conditional, we are expecting a mild upturn in October followed by further gains as restrictions are eased in line with higher levels of vaccination," Mr Willox said.

Australian PSI® – Key Findings for September 2021:

• The business-oriented sectors in the Australian PSI® were stable or contracted in September (see table below) with most respondents reporting some impact from lockdowns in Victoria and NSW and border restrictions nationwide. Logistics (up 3.1 points to 50.0) saw an increase in demand for freight transport and related services and reported stable conditions for the sector.
• Among consumer-oriented sectors, retail trade & hospitality reported large falls in activity (up 5.7 points to 28.8) as lockdowns in Victoria and NSW greatly diminished demand, while personal, recreational & other services also shrank further (down 7.0 points to 43.0).
• Two of the five activity indices in the Australian PSI® expanded in September (see table below), with employment remaining positive for a sixth month (down 1.4 points to 52.0) and the inventories index rising into expansion (up 15.8 points to 53.5). The sales index contracted further for a second month (up 1.4 points to 41.4) after six months of solid growth ended in July, while new orders shrank to its lowest level since September 2020 (down 7.6 points to 39.8) after reaching a series high in May 2021.
• The input prices index moderated further (down 7.0 points to 64.5), returning to levels similar to early in 2021. September marked 15 months of input price increases after a record low for this index in June 2020. The selling prices index slowed but remained positive for a seventh month (down 1.4 points to 53.9), indicating that fewer businesses were able to pass on rising input costs to their customers. The average wages index decelerated (down 3.8 points to 59.2), indicating a second month of easing wage pressures.

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Results above 50 points indicate expansion. Trend indexes in the Australian PSI® are calculated with a Henderson 13-month filter formula.
na: Results are not available for this sector in this period due to unusually low survey response numbers. All sectors are included in the total results.

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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.

Media Enquiries: Tony Melville: 0419 190 347