Australian PMI indicates improving circumstances

The Australian Industry Group Australian Performance of Services Index (Australian PSI) rose by 1.4 points to 54.3 over the summer holiday period (December 2020 and January 2021), indicating a further improvement in conditions following the Covid-19 recession of 2020 (results above 50 points indicate expansion, with the distance from 50 points indicating the strength of the increase).

Ai Group chief executive, Innes Willox, said, “In December and January the Australian services sector continued to emerge from the 2020 contraction, growing at the fastest pace in over a year. With a considerable way to go before a full recovery can be claimed, the more convincing lift in new orders is an encouraging pointer to continuing recovery over coming months. Sales also grew strongly – in part reflecting a release of pent-up demand and higher levels of confidence and employment as the sector continued to recover.

“The performance of individual industries varied around these sector-wide trends with business and property and the retail trade and hospitality sectors edging back into expansion; logistics gaining further ground while health services was narrowly short of expansion; and personal, recreational & other services slumping over the two months,” Mr Willox said.

This was the highest monthly result in the Australian PSI since November 2019.

Among business-oriented services sectors in the Australian PSI, logistics recovered further in December and January (up 2.1 points to 55.4) as easing restrictions, pent-up demand and improved supply boosted activity for freight and related services. Government stimulus for construction helped boost demand for business and property services (up 3.8 points to 51.2).