MNI 5 Things:Australia AI Services Expand But Retail Contracts

By Sophia Rodrigues

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

Industry Group's Performance of Services Index for February published Monday:

     --The index fell 0.9 point to 54.0 in February but remained in expansion

for 12 consecutive months, the longest such run since March 2008. 

     --Retail was the only sub-sector that contracted in trend terms but is

among the most important sectors for the Reserve Bank's growth and inflation

forecasts for the economy. The retail sub-sector fell 2.7 points to 35.8,

marking eleven months of contraction and the lowest level since June 2012. The

sector continues to face headwinds from high household debt and from intense

market competition.

     --Selling prices rose 1.1 points to 52.9, marking two straight months of

mild price increases. Given the rise in input prices to the highest since April

2015, the increase in selling prices suggests businesses are no longer able to

absorb cost increases like they did in the past and are passing them at least in

part to customers.

     --Employment fell 4.2 points to 53.9 but that follows strong growth in

January. Employment demand was mixed, with expansion in industries with higher

level skill needs. This is in line with other employment related data suggesting

skill shortages in some sectors. However, offsetting this is weaker employment

needs across retail, wholesale and hospitality.

     --The health, education and community services sub-sector rose 2.9 points

to 53.3 points, marking the first return to growth after fourteen months of flat

or negative conditions. The improvement appears to relate to sales and new

orders as well as employment, but this hasn't enabled price rises in the

sub-sector

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

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