Sluggish services sector

ACTIVITY in the Australian services sector has edged only marginally higher in December, with households wrapping up the year on a cautious note due to cost of living pressures.

The Australian Industry Group’s Performance of Services Index (PSI) rose 0.3 points to 52 points in December, remaining above the 50-point level signifying expansion.

Four of the nine sub-sectors expanded, the PSI shows, but contraction in a further four kept overall growth in check.

Ai Group chief executive Innes Willox said that while overall growth had expanded in the services sector, declines in the retail, health, transport and communication service sub-sectors had kept the month’s gains modest.

The retail trade sub-sector index moderated to 44.5 points, indicating a further deterioration in conditions, and marking a 10th straight month of flat or declining activity, according to the PSI.

Retail businesses blamed a lack of consumer confidence and cautious attitude to spending due to cost of living pressures.

“Service businesses will be looking for a lift in consumer confidence and household spending as the new year unfolds,” Mr Willox said.

Of the PSI’s five activity sub-indexes, new orders, employment and supplier deliveries expanded, while sales fell and stocks (inventories) were roughly stable after falling in November.

THE growing popularity of the SUV has driven another record year of car sales for the Aussie motor industry, with the sports utility overtaking other car sales for the first time. Federal Chamber of Automotive Industries data shows that Australians...