The Australian Industry Group Australian Performance of Services Index (Australian PSI®) rose by 4.5 points to 31.6 points in May, indicating another serious contraction in activity, albeit at a slower pace than in April. This was the second lowest result in the history of this series (commencing in 2003), following a record low in April (results below 50 points indicate contraction, with lower numbers indicating a stronger pace of decline).
Heavy restrictions on activity in response to the COVID-19 pandemic have taken a large toll on most of Australia's services industries. The Australian PSI® indicated contraction in all sectors in May. Restrictions on commercial activity have now been in place since March, to varying degrees, around Australia. The recent easing of restrictions in some locations led to muted optimism for businesses who responded later in May.
Reduced customer demand was evident for most businesses across all services sectors in May. An easing of restrictions was reported by some businesses as having had a positive impact on demand in some states. Retailers and wholesalers who supply products for home improvements, medical product suppliers and ICT services reported more positive customer demand in May. Some businesses said the previous element of panic buying for their products in March and April has now fallen away.
