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Australian PSI®: Services growth continues in August's mixed bag

The Australian Industry Group Australian Performance of Services Index (Australian PSI®) fell by 3.4 points to 53.0 in August – a sixth consecutive month of expansion, albeit at a more moderate pace and with greater variation across the services sub-sectors (results above 50 points indicate expansion, with the distance from 50 points indicating the strength of the increase).

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Ai Group Chief Executive, Innes Willox, said: "Positive momentum continued in the services sector as a whole in August with the current expansion completing its sixth month. Within the sector there was a wide variety of experience with performance improving markedly for personal & recreational services and communication services; growth continuing for the wholesale, transport & storage, health & community services, property & business and finance & insurance sub-sectors; while both the retail and hospitality sub-sectors contracted. Sales, new orders and employment all lifted in August and the capacity utilisation measure in the Australian PSI® recorded its highest-ever level. On the wages and prices front, wages and input prices both rose further in August while consumer inflation remained subdued with selling prices falling in the month," Mr Willox said.

Australian PSI® – Key Findings for August:

  • Four of the five activity sub-indexes in the Australian PSI® indicated growth in August (see table below) with sales (down 6.8 points to 53.5), new orders (down 1.0 point to 54.2) and employment (down 4.4 points to 52.5) all growing, but at a slower rate than in July, while stocks built up at a faster rate (up 4.1 points to 54.9).
  • Seven of the nine services sub-sectors in the Australian PSI® expanded in August (trend data*), with personal & recreational services (up 4.2 points to 67.6) and communication services (up 4.3 points to 61.4) hitting record highs.
  • Activity in retail trade (down 1.1 point to 42.1) and hospitality (down 4.5 points to 38.5) fell further into contraction in August.
  • Input prices accelerated slightly in August (up 0.4 points to 59.3), with respondents continuing to single out high energy cost pressures across almost all sub-sectors. The wages sub-index strengthened by 2.6 points to 57.7, indicating rising upward pressure on wages.
  • The sub-index for selling prices indicated falling prices for a second month, dropping 1.6 points to 47.5 – the lowest result in 12 months.
  • Capacity utilisation hit a record high in the Australian PSI® of 81.4% across the services sector in August.

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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®

53.0 

-3.4

52.7

Supplier Deliveries

49.7

-4.8

51.6

Sales

53.5

-6.8

54.1

Input prices

59.3

0.4

59.8

New Orders

54.2

-1.0

54.2

Selling Prices

47.5

-1.6

49.6

Employment

52.5

-4.4

52.3

Average Wages

57.7

2.6

56.2

Stocks

54.9

4.1

48.0

Capacity Utilisation (%)

81.4

3.2

76.7

* 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