SYDNEY, Jan 6 (Reuters) - Activity in Australia's service sector contracted for a ninth straight month in December and weakness in new orders pointed to further hardship ahead, a survey showed on Tuesday.
The result followed an equally dismal survey on the manufacturing sector last week, underlining the continued risk of recession and reinforcing expectations for further cuts in interest rates.
The Australian Industry Group (AiG)-Commonwealth Bank Performance of Services Index (PSI) edged up 1.5 points to 39.3 in December, but that remained far below the 50 line marking the threshold between expansion and contraction.
'Activity expanded in only one of the nine services sectors, highlighting the extent to which the industry has been hit by the global economic downturn,' said Heather Ridout, chief executive of AiG.
'Of particular concern is the continued decline in new orders and supplier deliveries.'
The survey's index of new orders improved only marginally to 38.0 in December, from 35.3 the month before, while deliveries deteriorated further.
The weakness in the giant services sector was one reason the Reserve Bank of Australia (RBA) has slashed its key cash rate by 3 percentage points since September, the most aggressive easing since the recession of the early 1990s.
'The data also helps signpost more significant RBA policy easing in early 2009,' said John Peters, a senior economist at CBA. He expects the central bank to cut its cash rate to 3.25 percent by April.
There were at least some signs of a stabilisation in December, albeit at very low levels. The survey's index of sales rose 5.0 points to 38.3, helped in part by an improvement in the transport sector as petrol prices fell.
The measure of employment held at 42.1, after slipping to 42.0 in November.
(Reporting by Wayne Cole; Editing by Jonathan Standing) Keywords: AUSTRALIA ECONOMY/SERVICES (wayne.cole@reuters.com ; +61 2 9373 1813; Reuters Messaging: wayne.cole.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The result followed an equally dismal survey on the manufacturing sector last week, underlining the continued risk of recession and reinforcing expectations for further cuts in interest rates.
The Australian Industry Group (AiG)-Commonwealth Bank Performance of Services Index (PSI) edged up 1.5 points to 39.3 in December, but that remained far below the 50 line marking the threshold between expansion and contraction.
'Activity expanded in only one of the nine services sectors, highlighting the extent to which the industry has been hit by the global economic downturn,' said Heather Ridout, chief executive of AiG.
'Of particular concern is the continued decline in new orders and supplier deliveries.'
The survey's index of new orders improved only marginally to 38.0 in December, from 35.3 the month before, while deliveries deteriorated further.
The weakness in the giant services sector was one reason the Reserve Bank of Australia (RBA) has slashed its key cash rate by 3 percentage points since September, the most aggressive easing since the recession of the early 1990s.
'The data also helps signpost more significant RBA policy easing in early 2009,' said John Peters, a senior economist at CBA. He expects the central bank to cut its cash rate to 3.25 percent by April.
There were at least some signs of a stabilisation in December, albeit at very low levels. The survey's index of sales rose 5.0 points to 38.3, helped in part by an improvement in the transport sector as petrol prices fell.
The measure of employment held at 42.1, after slipping to 42.0 in November.
(Reporting by Wayne Cole; Editing by Jonathan Standing) Keywords: AUSTRALIA ECONOMY/SERVICES (wayne.cole@reuters.com ; +61 2 9373 1813; Reuters Messaging: wayne.cole.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.