static image

Australian PSI®: Jobs dividend from growing services sector

The Australian Industry Group Australian Performance of Services Index (Australian PSI®) fell 1.7 points to 55.2 in April – a 14th consecutive month of positive results despite a slight deceleration of growth compared to March (results above 50 points indicate expansion, with the distance from 50 points indicating the strength of the increase).

Download full report

Ai Group Chief Executive, Innes Willox, said: "Continuing growth by services businesses is making the sector the engine room of Australia’s current jobs boom. The employment sub-index of the Australian PSI® has pointed to rising services sector employment for eleven consecutive months built on a run of activity growth now extending into its fourteenth month. In April, employment growth was strongest in the business-facing services sub-sectors of property & business; communications; transport & storage and finance & insurance services backed by more modest gains from the wholesale and retail sectors and easily outweighing some jobs loss in other sub-sectors. Wages growth lifted again in April with greatest wages pressure in higher-skill occupations and in the more rapidly growing sub-sectors where an increasing number of employers are reporting skill shortages. A healthy level of new orders suggests a positive immediate outlook for the services sector as a whole," Mr Willox said.

Australian PSI® – Key Findings for April:

  • Four of the five activity sub-indexes in the Australian PSI® expanded in April (see table below), with new orders growing more slowly than in March (down 2.7 points to 56.3) while sales were robust (up 0.8 points to 55.8). Employment continued to grow for an 11th consecutive month, rising 3.7 points to 58.6 with demand for labour stronger in business-driven rather than consumer-oriented sub-sectors.
  • The Australian PSI® was positive across seven of the nine services sub-sectors in April (trend), with the more business-oriented sub-sectors again reporting increasing demand from customers in construction and manufacturing. The very large finance & insurance sub-sector accelerated slightly (up 0.5 points to 61.6), while transport & storage jumped a further 3.7 points to another record high of 67.4.
  • The more discretionary consumer-oriented sub-sectors remained weak in April, with retail trade contracting (up 1.2 points to 42.3) along with hospitality (down 2.8 points to 41.4).
  • Capacity utilisation hit a record high in April, rising to 82.4% of all available capacity.
  • The input prices sub-index retreated further from its recent peak in February but remained elevated (down 2.5 points to 57.1), while wages ticked up by 0.3 points to 60.2. Wage pressures appear to be building in higher-skilled occupations and in business-oriented sub-sectors.
  • The sub-index for selling prices fell 0.4 points to 51.5, indicating more modest price increases for some businesses in service industries.

View all Economic Indicators

Seasonally adjusted

Index this month

Change from last month

12 month average

Seasonally adjusted

Index this month

Change from last month

12 month average

Australian PSI®

55.2 

-1.7

53.7

Supplier Deliveries

48.7

-12.6

53.3

Sales

55.8

0.8

53.5

Input prices

57.1

-2.5

60.1

New Orders

56.3

-2.7

54.4

Selling Prices

51.5

-0.4

50.0

Employment

58.6

3.7

53.9

Average Wages

60.2

0.3

56.6

Stocks

52.2

-2.8

52.5

Capacity Utilisation (%)

82.4

3.5

78.9

* All sub-sector indexes in the Australian PSI® are reported in trend terms (Henderson 13-month filter), 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.

Media Enquiries: Tony Melville: 0419 190 347