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5 Aug 2013
Australian services sector falls below 40.00, first time since GFC
FXstreet.com (Barcelona) - Earlier on the session it was learnt that the Australian Performance of Services Index (Australian PSI®) fell deeper into the red, this time by 2.1 points to 39.4 in July, suggesting further contraction in activity.
This is the lowest level for the Australian PSI® since March 2009, Ai Group reported, saying that "outside the GFC-related downturn in 2008-09, it is the first time the Australian PSI® has fallen below 40 points."
Quotes from Ai Group
Ai Group Chief Executive, Innes Willox, said: "The services sector started the new financial year with a disappointing slump in sales and new orders. While recent interest rate cuts have brought some cost relief to Australian businesses and the fall in the Australian dollar is very welcome, their effects are yet to show up in stronger sales. The retail sector reported another sharp contraction in July, while the index for the hospitality sector fell to its lowest level since May 2012. Businesses providing personal and recreation services and health services to consumers are faring better, with both sectors showing a mild expansion in July.
"Activity in the business-oriented services sectors remains weak. The wholesale trade and transport and storage sub-sectors continued to contract in July, in line with low levels of demand from retail, manufacturing and construction. Communications, finance & insurance and property and business services also contracted sharply during July.
"Of particular concern for the immediate outlook, employment in the services sector remained in contraction for a fourth consecutive month. Further, business margins remain under intense pressure, with the Australian PSI® indicating strong rises in input prices and particular weakness in selling prices. Together with the sharp contraction in new orders in July, this margin pressure does not suggest a pickup is imminent in activity or employment over the next few months," Mr Willox said.
This is the lowest level for the Australian PSI® since March 2009, Ai Group reported, saying that "outside the GFC-related downturn in 2008-09, it is the first time the Australian PSI® has fallen below 40 points."
Quotes from Ai Group
Ai Group Chief Executive, Innes Willox, said: "The services sector started the new financial year with a disappointing slump in sales and new orders. While recent interest rate cuts have brought some cost relief to Australian businesses and the fall in the Australian dollar is very welcome, their effects are yet to show up in stronger sales. The retail sector reported another sharp contraction in July, while the index for the hospitality sector fell to its lowest level since May 2012. Businesses providing personal and recreation services and health services to consumers are faring better, with both sectors showing a mild expansion in July.
"Activity in the business-oriented services sectors remains weak. The wholesale trade and transport and storage sub-sectors continued to contract in July, in line with low levels of demand from retail, manufacturing and construction. Communications, finance & insurance and property and business services also contracted sharply during July.
"Of particular concern for the immediate outlook, employment in the services sector remained in contraction for a fourth consecutive month. Further, business margins remain under intense pressure, with the Australian PSI® indicating strong rises in input prices and particular weakness in selling prices. Together with the sharp contraction in new orders in July, this margin pressure does not suggest a pickup is imminent in activity or employment over the next few months," Mr Willox said.