Australia’s services industry contracted in October for a ninth straight month, reinforcing the central bank’s decision last month to cut its benchmark interest rate, a private survey showed.
The performance of services index was 42.8 in October compared with 41.9 in September, Commonwealth Bank of Australia and the Australian Industry Group said in Sydney today. Fifty is the dividing line between expansion and contraction.
The Reserve Bank of Australia last month ended a three-meeting pause in rate reductions as it seeks to revive demand in industries outside a resource boom that policy makers say may crest at a lower level than previously expected. The strength of mining investment has boosted the local currency, which in turn has hurt tourism, education and retail industries.
The survey reflects the economy’s “significant structural adjustment due to the high Australian dollar, very cautious consumers, and the substantial fiscal tightening under way,” John Peters, senior economist economist in Sydney at Commonwealth Bank, said in a statement.
RBA Governor Glenn Stevens and his board lowered the overnight cash-rate target by a quarter percentage point last month to 3.25 percent. Traders are pricing in a 49 percent chance policy makers will do so again tomorrow, according to swaps data compiled by Bloomberg.
Today’s report showed the index’s gauge for sales edged down to 37.6 from 37.8, and the reading for new orders rose to 40.9 from 36.9. The employment indicator slid to 44.1 from 48.4, the report showed.
Selling prices climbed to 44.7 from 43.7, while the wages measure dropped to 54.3 from 58.4, 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.