Join our daily newsletter At The Bell to receive exclusive market insights
- Australia’s services sector grew once again in February, building on the improvements seen over the December-January holiday period
- The Ai Group’s Performance of Services Index (PSI) grew by a seasonally-adjusted 3.8 points in February to 60 points — well above the 50-point benchmark that indicates expansion
- Ai Group CEO Innes Willox says consumer-oriented sectors drove the gains as many parts of the nation came down from the peak of the Omicron spread in Australia
- Mr Willox says the prices of inputs and wages improved over February, but not as “dramatically” as the manufacturing and construction sectors
- The PSI growth comes comes despite staff shortages and supply chain woes continuing to impact several industries across the nation
Australia’s services sector grew once again in February, building on the improvements seen over the December-January holiday period.
The Australian Industry (Ai) Group’s Performance of Services Index (PSI) grew by a seasonally-adjusted 3.8 points in February to 60 points. Any result above 50 points is indicative of an expansion in the services sector.
Ai Group said all five of the services sectors that form the Australian PSI showed “robust” expansion in February, with consumer-oriented sectors driving the gains as many parts of the nation came down from the peak of the Omicron spread in Australia.
Discretionary spending lifted and demand from builders for supplies remained strong over February.
Ai Group chief executive Innes Willox said sales, employment, and new orders all added to the gains in the December-January period.
“Selling prices remained at a level that suggests a capacity to recover a proportion of cost increases in the market,” Mr Willox said.
“Performance improved with the greatest strength in the retail trade and hospitality and health and education sectors.”
He said the prices of inputs and wages improved over February, but not as “dramatically” as the manufacturing and construction sectors.
What’s more, all this comes despite staff shortages and supply chain woes continuing to impact several industries across the nation.
“With solid growth and a tight labour market, staff shortages and difficulties filling positions requiring skilled staff dominate concerns while supply disruptions are also presenting more than a few headaches,” Mr Willox said.
Looking at the numbers, the retail trade and hospitality sector of the PSI posted a 35-point monthly gain to close out February at 69.5 points — well above the 50-point benchmark that indicates expansion.
The personal, recreational and other services sector posted the second-biggest gain at 15.3 points, ending February at 56.8 points.
This comes after the sector faced contractionary conditions for the majority of the past two years. With high vaccination rates and COVID restrictions easing around many parts of the country, customer confidence has improved and driven an increase in personal, recreational and other services.
While growth in the business and property services sector shrunk by a slim 2.6 points compared to the December-January period, the sector still posted an overall monthly expansion by ending February at 54.4 points. Supply chain disruptions were offset by robust sales and a return to strong trading conditions after an Omicron-induced lull.
Logistic services, including wholesale trade, transport, and storage, improved by 6.1 points to 60.7 in February.
