MNI 5 Things:Record Capacity Utilization in Australia Services

By Sophia Rodrigues

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

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

Thursday:

     --The key theme from the services industry was the continued expansion in

capacity utilization which shows the businesses are running efficiently but may

need to invest further to grow. This could take the form of more hiring and more

capital investment. Capacity utilization rose 3.5 points to a record high 82.4%.

The Reserve Bank of Australia has been noting rise in investment and continued

employment growth, which is the main reason its monetary policy stance is

signalling the next interest rate move is likely to be up.

     --Employment rose 3.7 points to 58.6 points to expand for 11 straight

months. Employment demand is stronger in business-driven sectors than

consumer-oriented sectors such as hospitality, retail and health and community

services.

     --Overall though, expansion in the services industry moderated in April,

down 1.7 points to 55.2. The retail sub-sector rose slightly but continued to

remain in contraction. However partly offsetting this is continued expansion in

the wholesale sub-sector which has been taking over business from retail via

direct online sales to customers.

     --Supplier deliveries fell 12.6 points to 48.7 but this followed a

historical high in March and indicates businesses brought forward deliveries

before the Easter holiday period. 

     --Input prices moderated slightly from the recent peak in February and

average wages rose a little. Selling prices fell 0.4 points to 51.5 but this was

the fourth straight month that respondents reported increasing their selling

prices following six months of stable or contracting prices. This would have

implication for inflation outlook.

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

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