Following on from yesterday's official GDP numbers showing the importance of government stimulus spending in keeping the economy growing are figures today that have one major part of the private sector still rather sluggish. The The performance of services index prepared by the Commonwealth Bank of Australia and the Australian Industry Group fell 4.8 points to 47.5 from April. A figure below 50 indicates the industry is contracting.
Consecutive increases in official interest rates further suppressed demand for consumer-based services, most notably in the retail trade and accommodation, cafes & restaurants sub-sectors. Conditions also deteriorated in most of the business-related sub-sectors of services. Sales, new orders and employment each fell following solid growth in April, while supplier deliveries maintained its weak trend of the past two years. Services activity rose in only two states: Victoria and Western Australia.