Australia - February AIG Performance of Services Index to 51.7

  • up 1.8 points from a prior of 49.9
  • 12-month high (and first expansionary reading in a year)

Key Findings:

  • New orders up 2.8 points to 53.5, expanded for a second successive month
  • Employment up 2.8 points to 54.6, expanded for a second successive month
  • Supplier deliveries ended eight months in contraction, up 4.9 points to 51.5
  • Sales across services businesses contracted in February, down 2.2 points to 48.6
  • Stock levels, up 2.1 points to 48.1 - fell for a ninth month
  • Selling prices sub-index contracted marginally, up 1.1 points to 49.2, leaving services businesses' margins under intense pressure amid ongoing increases in wages, up 1.0 point to 57.7, and other input costs, up 3.1 points to 64.8
  • Retail trade sub-index remained broadly stable, down 0.3 points to 49.7
  • Wholesale trade up 0.3 points 47.2 ... 40th month in contraction
  • Finance & insurance sub-sector reached a historical high in February ... up 12.4 points to 68.9
  • Health & community services sub-sector up 1.4 points to 59.5

Ai Group Chief Executive, Innes Willox:

  • "The lift in services activity in February and the gradual recovery in momentum in the services sector over recent months is an encouraging, though still tentative indication of growth beyond the mining boom.
  • However, the pattern of growth remains patchy.
  • Health, community and financial services are enjoying strong conditions and the pick-up in residential building activity over the past year and a lower Australian dollar have boosted demand for certain services (e.g. tourism, real estate)
  • Yet, more generally respondents ... continue to raise concerns about weakness in the local economy and the ongoing fragility of consumer and business sentiment
  • The rapid decline in mining construction, continuing difficulties in the manufacturing industry, and a general lack of willingness to invest by both the public and private sectors, are dampening demand for business services such as accounting, legal, personnel and administrative services."