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Australian PSI®: Positive start to the year for services sector

The Australian Industry Group Australian Performance of Services Index (Australian PSI®) expanded for a third consecutive month in January but at a slower pace than in December, dropping by 3.2 points to 54.5 (results 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 services sector opened 2017 positively on the back of further lifts in sales, employment and new orders and building on the encouraging end to last year. While growth eased back from the very strong pace seen in December, it was relatively broadly spread across the very diverse services sector and included the highest showing from the wholesale sales sub-sector since the global financial crisis and the related rise in transport and storage services, which entered positive territory for the first time since 2011. Tempering the generally positive tone and a reminder of the fragility of the economy was the continued contraction in both the hospitality and communication services sub-sectors," Mr Willox said.  

Australian PSI® – Key Findings for January:

  • Four of the five activity sub-indexes in the Australian PSI® expanded in January (see table below), with supplier deliveries growing strongly (up 10.2 points to 61.0 – its highest ever reading). Sales (down 4.7 points to 57.4) and new orders (down 8.6 points to 51.8) remained expansionary, if at a slower rate, while stocks fell into contraction (down 6.7 points to 45.9).   
  • Six of the nine services sub-sectors in the Australian PSI® expanded in January (trend data*) with personal & recreational services (up 1.2 points to 65.0), finance & insurance (up 3.4 points to 62.7) and property & business services (up 0.6 points to 54.0) each strengthening. The very large health & community services sub-sector was broadly stable at 50.8.
  • Input prices continued to rise in January but at a slower pace (down 2.4 points to 59.7), while wages growth accelerated (up 8.3 points to 60.9). Selling prices were stable (down 1.6 points to 50.0), returning to the mainly flat or contractionary pricing conditions seen across much of 2016.

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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®

54.5

-3.2

51.3

Supplier Deliveries

61.0

10.2

50.6

Sales

57.4

-4.7

52.9

Input prices

59.7

-2.4

60.4

New Orders

51.8

-8.6

53.0

Selling Prices

50.0

-1.6

48.6

Employment

53.8

-2.8

49.9

Average Wages

60.9

8.3

54.1

Stocks

45.9

-6.7

47.3

Capacity Utilisation (%)

75.0

-3.3

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