SYDNEY, Feb 3 (Reuters) - Australia's service sector remained sluggish in January as flooding hit activity in Queensland while retailers struggled to get cautious consumers to part with their money, an industry survey showed on Thursday.
The survey of 200 firms by the Australian Industry Group (AiG) and Commonwealth Bank found new orders had dropped to the lowest since mid-2009, dragged down by retailing, wholesaling and hospitality.
The overall performance of services index (PSI) edged down 0.9 points to 45.5 in January, staying below the 50-level that separates growth from contraction.
The index of new orders fell 5.6 points to 39.7 while that for sales dipped 1.5 points to 45.4. The measure of employment eased 0.8 points to 48.0.
Input prices picked up even as selling prices contracted, suggesting pressure on profit margins.
'The Sector faces headwinds from the high Australian dollar, rising interest rates over 2010, and the onset of the catastrophic Queensland and Victorian floods in January which further torpedoed business and consumer confidence and activity,' said CBA senior economist John Peters.
'But looking ahead on the positive side of the ledger, a likely strengthening domestic economy in 2011, further solid jobs growth and falling unemployment, and rising income levels and wages, are likely to cheer up consumers,' he added.
(Reporting by Wayne Cole; Editing by Ed Davies) Keywords: AUSTRALIA ECONOMY/SERVICES (Wayne.Cole@thomsonreuters.com)(612 9373 1813)(Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. 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 survey of 200 firms by the Australian Industry Group (AiG) and Commonwealth Bank found new orders had dropped to the lowest since mid-2009, dragged down by retailing, wholesaling and hospitality.
The overall performance of services index (PSI) edged down 0.9 points to 45.5 in January, staying below the 50-level that separates growth from contraction.
The index of new orders fell 5.6 points to 39.7 while that for sales dipped 1.5 points to 45.4. The measure of employment eased 0.8 points to 48.0.
Input prices picked up even as selling prices contracted, suggesting pressure on profit margins.
'The Sector faces headwinds from the high Australian dollar, rising interest rates over 2010, and the onset of the catastrophic Queensland and Victorian floods in January which further torpedoed business and consumer confidence and activity,' said CBA senior economist John Peters.
'But looking ahead on the positive side of the ledger, a likely strengthening domestic economy in 2011, further solid jobs growth and falling unemployment, and rising income levels and wages, are likely to cheer up consumers,' he added.
(Reporting by Wayne Cole; Editing by Ed Davies) Keywords: AUSTRALIA ECONOMY/SERVICES (Wayne.Cole@thomsonreuters.com)(612 9373 1813)(Reuters Messaging: wayne.cole.thomsonreuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2011. 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.