MNI: Australia Services Sector Expands But Divergence Remains

     SYDNEY (MNI) - Australia's services sector remained in expansion in

November but consumer-oriented sub-sectors remained under pressure, underscoring

uncertainty about prospects for household spending.

     Data published by the AI Group Tuesday showed its performance of services

index rose 0.3 point to 51.7 to stay in expansion for the tenth month in a row.

Four of the five activity sub-indexes were in expansion. There was considerable

variation among sub-sectors, with five of nine in expansion and conditions

better in business-oriented sectors than in consumer-oriented sectors. 

     In particular, retail trade was in contraction for the ninth straight month

while hospitality contracted for the 23rd consecutive month. Partly offsetting

this was personal and recreational services, which has been in expansion since

July last year.

     The outperformer was the large personal and business services sub-sector,

which rose to 59.0, the strongest level since 2007. But the transport and

storage services sector continued to be in contraction as it faces challenges

from the lackluster retail sector, sharp rises in energy costs, technology

changes and a pricing squeeze.

     Overall, margins remained under pressure in the services sector, with

selling prices falling 0.9 point into contractionary territory at 49.8, while

average wages strengthening and input prices remaining high at 57.4, though they

fell 3.8 points in the latest month.

     From AI Group Performance of Services Index (Australian PSI) for November:

                      November  Change Over October

---------------------------------------------------

Australian PSI            51.7                 +0.3

Sales                     51.0                 +2.9

New Orders                52.9                 +1.4

Employment                52.1                 -1.2

Stocks                    49.3                 -5.5

Supplier Deliveries       51.9                 +0.2

Input Prices              57.4                 -3.8

Selling Prices            49.8                 -0.9

Average Wages             57.9                 +2.1

Capacity Utilization      78.0                 -0.9

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

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