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Australian PSI®: Services sector steady in April

The Australian Industry Group Australian Performance of Services Index (Australian PSI®) increased slightly by 0.2 points in April to 49.7, indicating a continuation of broadly stable conditions for the services sector (readings above 50 points indicate expansion, with the distance from 50 points indicating the strength of the expansion).


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Ai Group Chief Executive, Innes Willox, said: "The large and diverse services sector trod water in April.  Employment by services businesses retreated somewhat during the month while sales edged towards expansion and, encouragingly, new orders increased again. While there is likely to be some further hesitation by both businesses and consumers ahead of the federal election, the combination of the Reserve Bank's interest rate cut and the pro-investment business tax measures announced in the Budget last night is likely to boost confidence and services sector activity over coming months," Mr Willox said.

Australian PSI® - Key Findings for April:

  • Among the five activity sub-indexes in the Australian PSI®, only new orders (unchanged at 51.9 points) and supplier deliveries (up 2.2 points to 51.5) expanded in April, while sales remained largely stable (up 0.3 points to 49.7).
  • Employment (up 0.3 points to 48.1) remained weak in an eighth straight month of contraction.
  • Five of the nine services sub-sectors in the Australian PSI® were stable or expanded in April (in three-month moving averages), with finance & insurance (up 6.5 points to 60.7) and health & community services (down 4.3 points to 54.2) still leading the way.
  • While retail trade returned to expansion after six months of contraction (up 5.4 points to 52.8), the wholesale trade sub-sector slipped back into contraction after a short-lived recovery in March (down 5.1 points to 45.4).
  • Input prices (up 4.3 points to 62.5) and wages (up 3.6 points to 57.8) both continued to expand in April, while selling prices stabilised from contraction (up 3.0 points to 49.9) amid ongoing margin pressures for services businesses.  

Full report (available at 9.30am): http://www.aigroup.com.au/portal/site/aig/economicindicators/
Media enquiries: Tony Melville 0419 190 347


Seasonally adjusted index

Index
this month

Change from
last month

12 month
average

Seasonally
adjusted index

Index
this month

Change from
last month

12 month
average

Australian PSI®

49.7

+0.2

50.5

Supplier Deliveries

51.5

+2.2

49.9

Sales

49.7

+0.3

52.6

Input Prices

62.5

+4.3

63.7

New Orders

51.9

+0.0

50.8

Selling Prices

49.9

+3.0

50.3

Employment

48.1

+0.3

49.4

Average Wages

57.8

+3.6

55.1

Stocks

45.9

-2.4

47.8

Capacity utilisation

80.4

+2.5

75.9

* All sub-sector indexes in the Australian PSI® are reported as three month moving averages (3mma), so as to better identify the trends in these volatile monthly data.

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.