Australia’s services sector expanded for the fourth month in a row during September, according to the latest release of the AiGroup’s Performance of Services Index (PSI).
That’s the “longest period of continuous expansion since March 2008,” the AiGroup said this morning.
While the stretch above the 50 expansion/contraction level stretched into its fourth month the index actually dipped back 3.4 points to 52.3.
Three of the five subindexes expanded but both new orders and services sales, while still in expansion, pulled back sharply to 51.8 and 58.5 respectively. Stock levels were stable at 50 while supplier deliveries were stable at 49.9 but employment slipped 3.6 points to 48.9.
Employment bears watching butu the AiGroup said:
This pause came after expansion in the previous two months and expansion in seven of the nine months of 2015 so far. The latest ABS labour force data confirm that in the year to August 2015, most of the employment growth (250,000 additional jobs or 2.2% p.a. growth across the economy) came from the services sector, with the strongest jobs growth occurring in healthcare (+90,000 jobs), hospitality (+40,000) and professional services (+30,000) over the year to August.
Like manufacturing, which is having its longest expansion since 2010, the fall ini the Australian dollar appears to be an important contributor to the strength of the services sector.
AiGroup CEO Innes Willox said:
The continued expansion of the services sector in September was marked by growth in six of the nine services sub-sectors. This broadening of the sources of domestic growth is an encouraging sign of an economy responding favourably to the stimulus of low interest rates and the further fall in the Australian dollar. Still-buoyant housing market activity is clearly a factor in the growth of some sub-sectors and there is some early evidence that changes in the political environment may have supported consumer confidence and sales. Local tourism, retail and other consumer services are noticing the benefits of the lower dollar offsetting the higher local currency prices of imported inputs.
While the index pulled back this is another sign that the domestic economy is performing well and benefiting from the lower currency.