Australian Industry Group Performance of Services Index for May: 49.6
- prior was 49.7
Key points from AiG:
Three-month moving average down by 0.7 points to 49.8 points in May, following two months of expansion
Recent results from the Australian PSI suggest growth in Australian demand for goods and services (as measured by the ABS in the National Accounts as 'domestic final demand') may have picked up moderately so far in Q2 2015
Only one of the five activity sub-indexes expanded (i.e. above 50 points) in May
- Both the sales and new orders sub-indexes contracted for a second month in May
- Supplier deliveries contracted for a third month in May while services businesses reduced their stock levels for a 12th consecutive month
- More positively, services employment expanded for a fifth consecutive month in May and at its fastest pace since December 2004
Four of the nine services sub-sectors showed expansion this month
- The very large health and community services sub-sector (50.3 points, three-month moving averages) expanded for a seventh month in May
- Finance and insurance services sub-sector expanded for a fifth month (70.2 points)
- Both retail trade (53.4 points) and personal and recreational services (57.0 points) expanded for a third month
- All other services sub-sectors contracted in May
The Federal Budget and the cut to the cash rate by the RBA in early May appear to have little impact on the services sector thus far
A buoyant housing market, very low interest rates and a lower Australian dollar are supporting conditions, but respondents raised concerns about ongoing weakness in household income growth and spending
Subdued business confidence, a poor economic outlook, and a low appetite for spending and investment, continue to affect demand for a wide range of business services
