Ai Group - Australian Industry Group

01/03/2018 | Press release | Distributed by Public on 01/03/2018 18:40

Australian PSI®: Services sector steady not stellar in December

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Ai Group Chief Executive, Innes Willox, said: 'Australia's services sector edged ahead in December as households closed out the year on a cautious note. While the sector continued to grow overall, contractions in the retail, health & community, transport & storage and communication service sub-sectors ensured the gains were modest. On the plus side, employment lifted in December and new orders remained in positive territory. Service businesses will be looking for a lift in consumer confidence and household spending as the New Year unfolds,' Mr Willox said.

Australian PSI® - Key Findings for December:

  • Of the five activity sub-indexes in the Australian PSI®, new orders, employment and supplier deliveries expanded; stocks (inventories) were roughly stable; and sales contracted (see table below).
  • As evident throughout 2017, there was considerable variation in activity across the nine services sub-sectors in December (trend data*). Four sub-sectors expanded: hospitality (53.4 points), property & business services (65.5 points), wholesale trade (51.9 points) and personal & recreational services (51.8 points); financial & insurance services slowed to be approximately stable in December at 49.8 points.
  • Four services sub-sectors contracted: retail trade (44.5 points), health & community services (42.5 points), transport & storage (41.7 points) and communication services (41.1 points).
  • Input prices accelerated again in December, with rising energy costs contributing to the highest result for this sub-index since July 2015 (up 6.3 points to 63.7 points). The wages sub-index decelerated slightly, falling 1.6 points to 56.1 points.
  • The sub-index for selling prices dropped further into contraction, indicating price falls in December (down 4.6 points to 45.2 points). This probably reflected an extremely competitive retail market, relatively weak inflation, relatively weak consumer demand for discretionary goods and services, and recent rises in the Australian dollar (which tends to make imports cheaper).

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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®

52.0

0.3

52.6

Supplier Deliveries

58.5

6.6

53.0

Sales

49.1

-1.9

52.9

Input prices

63.7

6.3

59.2

New Orders

51.0

-1.9

53.1

Selling Prices

45.2

-4.6

49.3

Employment

52.7

0.6

52.6

Average Wages

56.1

-1.8

56.7

Stocks

50.8

1.5

50.0

Capacity Utilisation (%)

79.3

1.3

77.2

* 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