The Australian Industry Group Australian Performance of Services Index (Australian PSI®) fell by 1.5 points to 53.7 in November, marking a fourth month of positive conditions as the retail & hospitality sector demonstrated robust growth on the back of in-store and online sales events in the lead-up to Christmas (results above 50 points indicate expansion, with the distance from 50 points indicating the strength of the increase).
Ai Group Chief Executive, Innes Willox, said: "Service businesses will take heart from the continued expansion as we head towards Christmas and will be further encouraged by the healthy lift in new orders recorded in November. Overall, services businesses reported a slower improvement in performance in November with sales and employment growth easing during the month. The fastest growing sectors in November were the retail trade & hospitality and finance & insurance groups. Health & education and business & property services dragged overall performance down while logistics services was broadly stable and recreation, personal & other services expanded at a gentle pace. Service businesses saw a further tightening in margins in November with input prices and wages both increasing more than selling prices," Mr Willox said.
Australian PSI® – Key Findings for November:
- The Australian PSI® indicated expansion in three sectors, stability in one sector and contraction in two sectors in November (trend – see table below). Among business-oriented sectors, finance & insurance continued to lead the way (up 1.5 points to 61.3) while consumer-oriented sectors were led by robust growth in retail trade & hospitality (up 4.1 points to 58.8).
- Among the activity indexes in the Australian PSI®, new orders rose solidly in November (up 4.2 points to 58.5) while sales growth moderated (down 5.5 points to 52.4). After a patchy first half of the year, employment expanded for a fourth consecutive month (down 1.6 points to 54.4).
- The input prices index accelerated in November (up 4.2 points to 63.1) while the average wages index dropped 8.0 points to 58.7, indicating a moderation in wage pressures.
- The selling prices index, negative throughout 2019, rose into expansion in November (up 7.1 points to 52.3), ending 15 months of contraction or flat results.
Seasonally adjusted |
Index this month |
Change from last month |
12 month average |
Trend |
Index this month |
Change from last month |
12 month average |
Australian PSI® |
53.7 |
-1.5 |
50.4 |
Business-oriented services |
|||
Sales |
52.4 |
-5.5 |
50.7 |
Business & property |
46.6 |
-0.3 |
51.0 |
Employment |
54.4 |
-1.6 |
50.5 |
Logistics |
50.3 |
1.6 |
46.9 |
New Orders |
58.5 |
4.2 |
51.0 |
Finance & insurance |
61.3 |
1.5 |
53.1 |
Supplier deliveries |
50.7 |
-4.3 |
49.2 |
||||
Finished stocks |
47.5 |
-1.3 |
49.3 |
Consumer-oriented services |
|||
Capacity utilisation (%) |
80.9 |
0.5 |
76.3 |
Retail trade & hospitality |
58.8 |
4.1 |
48.1 |
Prices and wages |
Health & education |
48.3 |
-4.2 |
52.2 |
|||
Input prices |
63.1 |
4.2 |
64.1 |
Recreation, personal & other |
51.3 |
2.0 |
53.7 |
Selling prices |
52.3 |
7.1 |
48.6 |
||||
Average wages |
58.7 |
-8.0 |
57.4 |
Results above 50 points indicate expansion. All indexes for sub-sectors in the Australian PSI® are reported in trend terms (Henderson 13-month filter).
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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.