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Exclusive interviews with leading policymakers that convey the true policy message that impacts markets.
LATEST FROM POLICY: - G10 MarketsG10 Markets
Real-time insight on key fixed income and fx markets.
Launch MNI Podcasts - Emerging MarketsEmerging Markets
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Free AccessMNI 5 Things:Australia Services Expansion Driven By New Orders
By Sophia Rodrigues
SYDNEY (MNI) - Following are the five key observations we made from
Australian Industry Group's Performance of Services Index for May published
Tuesday:
--The services industry expanded for fifteen straight months, up 3.8 points
to 59.0 in May. The latest rise was driven by new orders which surged 8.7 points
to 65.0 points.
--Capacity utilization fell marginally in May to 81.9% but remained well
above the long-term average of 75.7% suggesting businesses have low spare
capacity and may soon need investment to spend.
--Selling prices sub-index rose 1.4 points to 52.9 to mark five straight
months of increase. This indicates businesses are feeling slightly more
confident to raise prices amid rising input and labor costs. Input prices rose
9.7 points to 66.8 points and average wages rose 4.4 points to 64.6. Wage
pressures appeared to be increasing due to skill shortages in higher skill and
business oriented sub-sectors. If this becomes widespread, it would bode well
for the wage costs for the economy and support the Reserve Bank of Australia's
monetary policy stance for next move in the cash rate to be up.
--The expansion in the services industry, however, remained uneven with
more discretionary, mainly consumer-oriented sub-sectors remained relatively
weaker but business oriented sub-sectors doing very well. Retail trade
contracted again, as did hospitality as they continue to report cautious
discretionary spending due to rising energy and other household costs, as well
as changing consumer preferences.
--The transport and storage services sub-sector rose by 3.1 points to a
record high of 71.3 points in May. However, AI warns this could be an aberration
due to an unusually concentrated sample of respondents in 2018, all of whom are
reporting strong conditions of late. May has historically been a quieter month
in the year for this sector, but this May the transport businesses are still
reporting robust demand from their business customers, and particularly from
those in the busier parts of manufacturing and construction.
--MNI Sydney Bureau; tel: +61 2-9716-5467; email: sophia.rodrigues@marketnews.com
[TOPICS: MALDS$,M$A$$$,M$L$$$,MT$$$$]
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.