Fears for jobs as services falter
Australia’s services sector has run out of steam after a four-month streak of expansion.
The loss of momentum was fuelled by a retreat of new orders and employment and a sharp drop in sales growth, figures from the Australian Industry Group on Wednesday show.
The Performance of Services index slumped 3.3 points to 48.9 in October, falling below the 50 level that separates expansion from contraction.
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The result is a reminder of the fragility of the economy as it steers away from mining growth amid plummeting commodity prices, Ai Group chief executive Innes Willox said.
“The services sector is critical to this transition,” he said.
“(So this) will add to the case for additional stimulus, particularly in the absence of wage and price pressures,” he said.
Only two of the five activity sub-indexes expanded in October, with services sales growing very mildly and supplier deliveries remaining stable.
Growth in new orders paused after four months of expansion, while stock levels fell and employment posted a second month of minor contraction.
However, six of the nine sub-sectors grew, with finance and insurance, along with health and community services the strongest.
And selling prices expanded for a fourth month, which likely reflects the need to pass on higher costs for imports due to the lower dollar, the survey found.