Australia’s services sector stalls in August post 13 months of rally

Australia’s services sector fell during the month of August, snapping 13 months of constant improvement. Services account of over 70 percent of the country’s economic growth.

 The Ai Group’s manufacturing Purchasing Managers’ Index (PMI) plummeted 9.5 points to 46.9, marking the first deterioration in activity levels seen since June 2015. The group’s Performance of Services Index (PSI) plunged by 8.9 points to 45.0 for the month, marking the lowest reading since November 2014.

Further, it also marked the largest points decline for the index in the history of the survey, continuing the trend established in the manufacturing PMI report.

Moreover, the Ai Group’s, all five of the surveys activity sub-indices saw activity levels contract from the levels seen in July, led by an alarming drop in gauge measuring sales. It slumped 15.7 points to 43.7, leaving it at the lowest level since December last year. It was also the first time this year that sales levels declined compared to the prior month.

Elsewhere measures on new orders, employment, inventory levels and supplier deliveries fell by 4.7 points, 6.5 points, 8.4 points and 8.4 points respectively, leaving them all below the 50 level that signals deterioration in activity levels.

Meanwhile, given the renewed focus on the health of the Australian labour market, the employment sub-index fell to 43.5, the lowest level seen since April 2009. That suggests that firms shed staff at the fastest pace since the depths of the global financial crisis last month, at least according to this survey, reports confirmed.