Australia’s services industry contracted in November for the sixth time in seven months as higher borrowing costs and a stronger currency weighed on spending, a private survey showed.
The performance of services index fell 4.5 points to 46.2 in November, Commonwealth Bank of Australia and the Australian Industry Group said in Sydney today. A figure below 50 indicates contraction.
The Reserve Bank of Australia last month raised its benchmark interest rate for the seventh time in the past 14 months as it seeks to prevent the economy from overheating. Those increases helped stoke an 8.9 percent gain in the local dollar this year, the second best performance among the 16 major currencies.
Today’s report “points to a sector continuing to battle fragile consumer and business spending which has been dampened by rising interest rates,” Australian Industry Group Chief Executive Heather Ridout said in a statement. “The tourism-related sub-sectors of accommodation, cafes and restaurants and personal and recreational services are also battling the headwinds of the strong Australian dollar.”
The index’s gauge for sales declined to 45.6 from 55.3, and the reading for new orders dropped to 45 from 52.1. The wages indicator advanced to 60.1 from 57.4, 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.