The Australian Industry Group’s Performance of Services Index rose 0.3 points in November, keeping service sector activity in expansion mode during the month.

December 5, 2017

Australian services sector activity has edged higher for a second month but growth is still below the 12-month average.

The Australian Industry Group’s Performance of Services Index rose 0.3 points to 51.7 points in November, staying above the 50-point level signifying expansion.

Ai Group chief executive Innes Willox said that while overall growth had expanded in the services sector, the pace of growth had drifted lower in recent months.

“In general, the more business-facing sub-sectors such as property & business services, wholesale services and finance & insurance exhibited more strength than the more consumer-orientated sub-sectors,” Mr Willox said in a statement on Tuesday.

Four of the five sub-indexes were above 50, showing they enjoyed moderate growth in November, with only inventories in contraction.

And, five of the nine sub-sectors expanded, the PSI shows.

Activity in property and business services accelerated, recording its strongest result since 2007.

Personal recreation, wholesale and trade, finance and insurance and communications sectors were all still in expansion but activity had moderated.

But gains were offset by hesitant consumer spending in retail trade, health and community services, transport and storage sectors, and hospitality, which recorded its 23rd month of contractionary or flat conditions.

The retail trade sub-sector, at 46.3 points, remained well below the 50-point growth marker, posting its nine month of flat or contracting activity, although the deterioration was slowing, according to the PSI.

Retail businesses pointed to competition from from online and offshore sellers, which continues to grow as consumers become more comfortable with purchasing online.

Mr Willox said higher energy costs appeared to not only be squeezing businesses profits but also reducing consumers’ willingness to spend.

Western Australia’s conditions had improved but businesses continued to face tough conditions following the end of the mining boom.