MNI 5 Things:Australia Services Expansion Becoming Broad-Based

By Sophia Rodrigues

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

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

Wednesday:

     --The services industry rose 4.0 points to a record high 63.0 in June.

Significantly, the expansion is getting broad-based with all activity

sub-indexes above 50.0 and all sub-sectors, except retail, in expansion in trend

terms.

     --Retail rose 1.8 points to 48.4 and while it was the only sub-sector in

contraction, it is now moving closer to the expansion zone. In the latest month,

the sub-sector got a boost from financial year-end spending and cold weather in

some states. The wholesale trade sub-sector which has been seeing boost in the

last two years, partly due to business moving from retail, rose 1.5 points to

57.0. Wholesale trade has also been benefitting from increased business from the

construction and manufacturing sectors.

     --The property and business services sub-sector rose 1.9 points to a record

high 67.9 points to mark 21 straight months of continuous expansion. This

sub-sector continues to directly benefit from thriving infrastructure

investment, increased maintenance levels and demand for business services.

Businesses that service the mining industry are also reporting increased levels

of activity.

     --Among all the sub-indexes, selling prices was at the lowest level at 52.9

points. While the good news is that it remained in expansion for the sixth

straight month, it also showed businesses will continue to face margin pressures

as input prices and wages sub-index remain elevated.

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

by growth in construction and manufacturing, and while the more discretionary,

mainly consumer-oriented sub-sector remain relatively weak, the latest result

shows improvement in trend.

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

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