Sept. 3 (Bloomberg) -- Australia’s services industry contracted in August at a slower pace amid rising consumer and business confidence.

The performance of services index gained 3.9 points to 48, Commonwealth Bank of Australia and the Australian Industry Group said in Sydney today. A figure below 50 indicates the sector is contracting.

Central bank Governor Glenn Stevens left the benchmark interest rate at a half-century low of 3 percent this week to stoke economic growth that unexpectedly accelerated in the second quarter at the fastest pace in more than a year. Gross domestic product expanded 0.6 percent from the previous quarter, when it gained 0.4 percent, a report showed yesterday.

“The services sector continued to improve in August,” said Australian Industry Group Chief Executive Heather Ridout. “While the improvement is welcome, it’s not clear whether the expansion in activity will survive the winding down of government stimulus, let alone a rise in interest rates.”

Today’s report, which is based on a poll of about 200 companies, is similar to the U.S. non-manufacturing ISM index.

It measures sales, new orders, deliveries, inventories and employment for companies such as banks, real estate agents, insurers, restaurants, transport firms and retailers to compile the overall performance of services index.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

Last Updated: September 2, 2009 19:30 EDT