December 2019 - OVERVIEW
Services sectors slow down as year ends
The Australian Industry Group Australian Performance of Services Index (Australian PSI®) fell by 5.0 points to 48.7 points in December 2019 (seasonally adjusted). This was the first month of decline for Australia's services industries following four months of positive conditions. Results below 50 points indicate contraction in the Australian PSI® with lower numbers indicating stronger decline.
The Australian PSI® indicated expansion in three services sectors, stability in one sector and contraction in two sectors in December (trend). Among the three business-oriented sectors, finance & insurance reported positive results, logistics (wholesale trade, transport & storage) was stable, while business & property services contracted. Among the three consumer-oriented sectors, ‘retail trade & hospitality’ and ‘personal, recreational and other services’ reported positive conditions while ‘health, education & community services’ contracted slightly in December.
In good news for the jobs market, the employment index was the only activity indicator to be positive in December, growing at around the same rate as the previous month. Among the other activity indexes, sales were broadly stable, new orders were mildly contractionary and inventories and deliveries shrank at a faster pace over the month. Capacity utilisation rose to a record high of 83.8% of existing capacity across the services sectors, suggesting that investment in new capacity is being delayed, but may soon be needed for expansion in order to meet any demand growth in 2020.
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