Australian PSI®: Services recovery sustained in February

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Innes Willox, Chief Executive of the national employer association Ai Group, said: "Australian service sector businesses grew strongly in February with sales, employment and new orders all adding to the gains in the December-January period. Prices of inputs and wages were up but not as dramatically as in the manufacturing and construction sectors. Selling prices remained at a level that suggests a capacity to recover a proportion of cost increases in the market. Performance improved with greatest strength in the retail trade & hospitality and health & education sectors. Logistics services, personal and business & property services sectors also improved on the previous month. With solid growth and a tight labour market, staff shortages and difficulties filling positions requiring skilled staff dominate concerns while supply disruptions are also presenting more than a few headaches," Mr Willox said.

Australian PSI® – Key Findings for February 2022:

• All five sectors in the Australian PSI® showed robust expansion in February (see table below). Activity was strongest in the consumer-oriented sectors: retail trade & hospitality recorded a large increase in activity (up 35.0 points to 69.5), as did personal, recreational & other services (up 15.3 points to 56.8).
• Four of the five activity indices in the Australian PSI® expanded in February (see table below), with the sales index jumping 9.7 points to 68.6 and new orders also rising steadily (up 3.2 points to 61.1) – both reported their highest result since May 2021. The supplier deliveries index rose to its highest level since June 2018 (up 7.6 points to 59.0) and employment growth moderated slightly but remained positive (down 2.0 points to 54.7).
• The input prices index was largely unchanged from the December 2021-January 2022 summer period (down 0.1 point to 66.0), while the average wages index eased slightly (down 1.0 point to 55.9). The selling prices index was positive but decelerated from December 2021-January 2022 (down 1.9 points to 60.3); this index has been positive for over a year, indicating businesses are passing on at least some of their increased costs to their customers.

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Results above 50 points indicate expansion. Data is seasonally adjusted; trend data in the Australian PSI® calculated with a Henderson 13-month filter formula.
na: Results are not available for this sector in this period due to unusually low survey response numbers. All sectors are included in the total results.

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Background: The Ai Group Australian PSI® is a leading indicator of services activity in the Australian economy. It is a seasonally adjusted national composite index based on the diffusion indices for sales, orders/new business, deliveries, inventories and employment with varying weights. An Australian PSI® reading above 50 points indicates that services activity is generally expanding; below 50, that it is declining. The distance from 50 is indicative of the strength of the expansion or decline. Results are based on a sample of around 200 companies each month.

Media Enquiries: Tony Melville: 0419 190 347