MNI 5 Things: New Orders Boosting Australia Services Outlook

By Sophia Rodrigues

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

Australian Industry Group's Performance of Services Index for September

published Wednesday:

     --The performance of services index rose in September, following two months

of decline but remained in the expansion territory for 19 months in a row. Four

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

sub-sectors expanded in trend terms, up from six in August.

     --New orders rose 1.4 points to 53.4, to mark 19 months of continuous

expansion and the longest period of uninterrupted growth since September 2005,

boding well for the outlook for services industry over the next few months.

     --Retail trade rose further in September, up 2.0 points to 59.2 to record a

new high since June 2016. Retail sub-sector is getting a boost from construction

and related activity, and in September also experienced positive effect from

good weather.

     --Health, education and community services eased 1.4 points to 57.7 but

remained in expansion for eight straight months. Businesses in this sub-sector

are experiencing substantial growth but also rising input costs and falling

capacity utilization, which suggest further investment may be needed. The sector

is also experiencing skills shortages.

     --One concern in the survey was decline in selling prices sub-index, down

3.2 points to 46.4 which indicates pressure on margins as business face

difficulties in implementing price rises despite elevated input costs and rise

in wages.

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

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