MNI 5 Things: Australia AI Services Dn But Stays in Expansion

By Sophia Rodrigues

     SYDNEY (MNI)  - Following are the five key observations we made from

Australian Industry Group's Performance of Services Index for July published

Friday:

     --The services industry fell 9.4 points to 53.6, dropping sharply from the

record high level touched last month but remaining in expansion. Four of the

five activity sub-indexes were in expansion and six of the nine sub-sectors

expanded in trend terms.

     --Despite the fall in overall index, the good news was rise in retail

sub-sector, up 1.3 points in trend terms to finally move into expansion (50.2)

after spending a year below 50.0. While consumer spending continued to be

subdued, retailers saw positive effect from construction and related activity.

The wholesale trade sub-sector rose 0.4 points to 56.3, expanding for 23

straight months.

     --The property and business services sub-sector continued to expand in July

as they benefit from thriving infrastructure investment, increased maintenance

levels and demand for business services. The hospitality sub-sector which

includes accommodation, cafes and restaurants, contracted in July in trend terms

to mark 15 months of contraction. On the other hand, the personal and

recreational services sub-sector rose 2.9 points to 64.0.

     --Three sub-indexes recorded double-digit declines in July. Supplier

deliveries fell 17.3 points to 47.5, indicating businesses may have brought

forward deliveries at the end of the June financial year. Employment fell 10.5

points to 53.4, with biggest support from personal and recreational services,

and finance and insurance. New orders fell 12.4 points to 53.3, marking 17

months of continuous expansion but pointing to modest growth ahead.

     --Overall, the expansion in the services industry continues to be supported

by growth in construction and manufacturing, but consumer-oriented sub-sectors

are now showing more support to the industry.

--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com

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