Australia’s services sector went into reverse in April, as higher interest rates, rising fuel costs and volatile financial markets buffeted the economy.
The Australian Industry Group/Commonwealth Bank Performance of Services Index crashed 7.6 points in April to 47.3, below the key 50.0 level that separates expansion from contraction.
While four the nine sectors examined by the index grew in April – wholesale trade, accommodation, cafes and restaurants, communication services and personal and recreation services – sharp falls in the retail trade, finance and insurance, and transport and storage dragged down the overall index.
The sub-indices that track sales and new orders fell sharply, while employment dipped slightly.
The chief executive of the Australian Industry Group, Heather Ridout, says the weak services sector data should cement the case for interest rates to be put on hold. “The sharp decline in the PSI for April is consistent with recently released data pointing to deteriorating levels of consumer and business confidence, which will be front of mind when the RBA meets tomorrow.”