Australian PSI®: Services broadly stable in November

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Ai Group Chief Executive, Innes Willox, said: "The Australian services sector was broadly stable in November, underachieving relative to expectations of a more convincing recovery after the COVID-19 downturn in recent months. The performance of the sector was patchy with logistics and health & community services businesses showing accelerating growth; business & property services and retail trade & hospitality contracting less severely than in October; and personal, recreational & other services contracting at a slightly steeper rate than the previous month. Across the services sector, sales and employment were up while new orders, though still falling overall, were reported as rising by a larger proportion of services businesses than in October. Input price and wages pressures eased in November, returning to longer-run average levels while capacity utilisation rose in line with the upswing in sales and employment. Service businesses will be hoping for a stronger rebound in performance over the holiday months," Mr Willox said.

Australian PSI® – Key Findings for November 2021:

• The business-oriented sectors in the Australian PSI® reported diverse results in November (see table below) with logistics (up 5.3 points to 61.7) seeing another increase in demand for freight transport, while the business & property sector improved but remained in contraction (up 7.4 points to 42.0) as supply disruption, border restrictions and ongoing uncertainty had a dampening effect on demand.
• Among consumer-oriented sectors, health, education & community services reported positive conditions again in November (up 10.8 points to 62.9) as demand rose following a return to more normal operations, particularly in Victoria. Retail trade & hospitality (up 6.9 points to 41.8) reported an easing in decline but remained in contraction, as did personal, recreational & other services (down 1.2 points to 47.5).
• Of the five activity indices in the Australian PSI®, sales (down 1.6 points to 53.6) and employment (down 0.6 points to 56.2) remained positive while new orders (up 8.6 points to 47.4) contracted for a third month as purchasing decisions by customers continued to be deferred by businesses. The supplier deliveries index contracted at a similar rate to October (up 0.9 points to 40.4) and the inventories index contracted (up 2.7 points to 42.5) as some businesses experienced difficulties obtaining new stock.
• The input prices index eased in November but remained elevated (down 8.3 points to 65.3) – a 17th month of input price increases after a record low for the index in June 2020. The selling prices index was positive for a ninth month but decelerated from October (down 3.5 points to 58.2) as businesses continued to pass on rising input costs to their customers. The average wages index moderated (down 8.5 points to 59.8), indicating an easing in wages growth, but remained above its long-term average (57.2 points).

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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