Australian PSI®: Services recovery dampened by supply issues and input costs in March

Download full report

Innes Willox, Chief Executive of the national employer association Ai Group, said: "Australia's services sector continued its positive run in March although the pace of growth slowed in the face of intensifying input price pressures, difficulties in finding staff and further wage pressures. Growth in the services sector was more narrowly based than in February with the business & property services and personal, recreational & other services groups contracting and the health & education sector broadly unchanged from its performance in the previous month. It was left to the strong-growing logistics and retail trade & hospitality sectors to pull the broader sector into overall expansion. For the services sector as a whole, sales and employment continued to rise. Sales growth pulled back from the very high levels reported in February. The strong lift in new orders reported in March will see the capacity of many businesses stretched over coming months while the availability of staff and the supply of inputs are expected to remain constrained," Mr Willox said.

Australian PSI® – Key Findings for March 2022:

• Three of the five sectors available in the Australian PSI® expanded in March. Business-oriented sectors reported mixed results, with business & property slipping into contraction (down 6.5 points to 47.9) while logistics maintained last month's strong expansion (up 0.1 point to 60.8). All consumer-focused sectors reported lower readings compared to February's strong results (see table below).
• All five activity indices in the Australian PSI® expanded in March (see table below), with the new orders index rising again to its highest result since May 2021 (up 2.4 points to 63.5). The sales index fell 14.9 points to 53.7, offsetting February's strong result, while employment growth moderated slightly but remained positive (down 0.3 points to 54.4).
• The input prices index rose substantially in March to reach a series high (up 11.5 points to 77.5), while the average wages index also recorded strong growth (up 11.8 points to 67.7). The selling prices index rose to its highest level since July 2021 (up 4.2 points to 64.5). Taken together, these results suggest inflationary pressures are increasing.

View all Economic Indicators 

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.

NOW AVAILABLE:
Click here for full list of 2022 release dates for the Australian PSI®

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: Graham Turner: 0415 285 320