Australia's Services Sector Is Stuck In The Contraction Zone

Getty/Julian Finney

For the fifth month in a row Australia’s services sector remains in the contraction zone, the Australian Industry Group reports.

For sustained economic growth, Australia cannot transition without an expanding services sector.

AiG reported this morning its Performance of Services index rose a solid 1.7 points but remained in contraction zone in July printing 49.3 in July.

Disappointingly only three of the nine sectors in the index expanded in July but there could be signs the sector is starting to shift – even if only tentatively.

“The shift in the sales and new orders sub-indexes, which moved slightly above 50 points, was contrasted by continued contraction in supplier deliveries, stocks and employment – businesses are still unwilling to commit more working capital or to hire more staff due to the relatively flat economic outlook,” AiG said.

AiG Chief Executive Innes WIllox was more optimistic noting that, “Businesses will be encouraged by the pick-up in sales and new orders. This could be a sign that uncertainties over budget measures and the fall-off in demand for business services connected to slowing mining-related construction are fading in relative importance”.

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