The Australian Industry Group Australian (AiG) has just released it September Performance of Services Index (PSI) which tanked 4.0 points to 45.4.
It is the seventh consecutive month of contraction for services but by the look of the chart it is the weakest result since the sector picked up when the Abbott Government came to power in 2013. That is not good economic news.
There was a bright spot with employment up 4.0 points to 52.1 but otherwise all of the activity sub-indexes were below 50 points.
Reinforcing the big dip in retail sales in August and perhaps portending a similar result for September, the sales sub-index fell heavily 9.9 points to 41.5. Equally troubling, new orders dropped 8.4 points to 44.0.
Ai Group Chief Executive, Innes Willox wasn’t gilding the lilly, saying: “The drop in the Australian PSI in September calls into question the momentum that had been gathering over the previous couple of months. The sharp falls in sales and new orders underlines the fragility of the economy in search of sources of growth beyond the minerals and energy sector.”
This is just more evidence that were it not for the housing boom in Sydney the RBA might be soon thinking about easing rates in Australia.