Australia’s services industry shrank in July for a sixth straight month as companies struggled to adjust to the currency’s renewed strength, a private survey showed.
The performance of services index declined 2.3 points to 46.5 last month, Commonwealth Bank of Australia (CBA) and the Australian Industry Group said in Sydney today. Fifty is the dividing line between expansion and contraction.
The Australian dollar has appreciated more than 7 percent since the start of June, when the central bank made its fourth reduction in interest rates since November to help insulate the economy from potential shocks in Europe and a slowdown in China. Governor Glenn Stevens kept borrowing costs unchanged last month at 3.5 percent, the most among major developed nations. Higher yields and a mining investment boom are attracting investors and driving up the currency, hurting industries like tourism, manufacturing and services.
“The latest services sector snapshot mirrors the multi- speed growth rates being posted across industries and regions around the nation at present as the economy undergoes significant structural adjustment due to the high Australian dollar,” Commonwealth Bank senior economist John Peters said in a statement.
Today’s report showed the index’s gauge for sales fell to 48.5 from 50.6, and the reading for new orders slid to 46.6 from 50.3. The employment indicator dropped to 44.3 from 49.1, the report showed.
Selling prices rose to 44.2 from 43.1, while the wages measure surged to 62.2 from 55.3, the report showed.
Today’s report, based on a poll of about 200 companies, is similar to the U.S. non-manufacturing ISM index.
The report 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.
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