Australian Services Industry Index Shows Best Result Since June
A gauge of Australia’s services industry showed the strongest improvement since June as retailers recovered before the Christmas trading period.
The performance of services index was 47.1 in November compared with 42.8 in October, Commonwealth Bank of Australia (CBA) and the Australian Industry Group said in Sydney today. It was the 10th consecutive reading below 50, the dividing line between expansion and contraction.
The Reserve Bank of Australia reduced the benchmark interest rate for the sixth time in 14 months this week 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.
“Continuing weakness in the services sector lends support to yesterday’s decision to cut interest rates,” Innes Willox, AIG’s chief executive officer, said in a statement. “While the sector as a whole remains weak, there are some tentative signs of encouragement including the lift in retail trade one month out from Christmas.”
RBA Governor Glenn Stevens and his board lowered the overnight cash-rate target by a quarter percentage point to 3 percent yesterday.
Today’s report showed the index’s gauge for sales surged to 45.7 from 37.6, and the reading for new orders jumped to 46.3 from 40.9. The employment indicator gained to 48.3 from 44.1, the report showed.
Selling prices edged up to 45.4 from 44.7, while the wages measure rose to 54.9 from 54.3, 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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