Australian PSI®: Buoyant services sector hits new highs in April

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Innes Willox, Chief Executive of the national employer association Ai Group, said: "Australia's services sector expanded further in April as demand remained strong and despite difficulties finding staff and limited spare capacity. Growth was widespread across the services sector with business & property services; logistics; health & community services; and retail all at least maintaining the levels of activity recorded in March while personal, recreation & other services slipped further in April. While the pace of growth of new orders eased and some inroads were made into back orders, the services sector remains fully stretched and is battling cost and wage pressures. While the increase in interest rates may see a pull-back in demand in coming months, current imbalances are likely to continue in the period ahead," Mr Willox said.

Australian PSI® – Key Findings for April 2022:

• Four of the five sectors available in the Australian PSI® expanded in April, two at a slower rate than in March. Respondents reported solid demand, particularly from construction sector customers.
• All services activity indicators were positive, but new orders grew slower than the very elevated rates of previous months, reflecting a moderation of the rebound following a reduction in COVID restrictions.
• Services capacity utilisation rose to 82.3%, an all-time high for this series. Businesses reported plans to increase capacity by expanding employment and investment.
• Positively, some businesses reported improvements in supplier deliveries and back orders, loosening a major challenge for the sector. However staff shortages, rising input prices and wages, and difficulties sourcing stock continue to constrain expansion.

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Results above 50 points indicate expansion. Data is seasonally adjusted; trend data in the Australian PSI® 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.

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