Sydney, Feb 3 (IANS) Activity in Australia’s services sector lifted in January after three consecutive months of decline, a survey released Friday by the Australian Industry Group (Ai Group) showed.
The Australian Industry Group/Commonwealth Bank Australian Performance of Services Index (PSI) rose 2.9 points to 51.9 points in January, reported Xinhua.
Readings above 50 indicate an expansion in activity.
The survey found strong growth in the sub-sectors of accommodation, restaurants, finance and recreational services, while wholesale trade and communication services were the worst performers.
Ai Group Director Pubic Policy Peter Burn said the lift in the services sector activity was a welcome change from the contraction in the sector in the fourth quarter of 2011.
“The return of key sectors directly exposed to household spending to positive territory provides a tentative sign that the easing of interest rates towards the end of 2011 may have lifted consumer confidence despite the dampening stream of news coming from Europe,” he said in a statement Friday.
“Overall, however, the services sector remains patchy and continues to face strong headwinds including from the strength of the dollar and flat labour market conditions,” Burn said.
Commonwealth Bank senior economist John Peters said the Reserve Bank of Australia’s (RBA) official rate cuts totalling 0.5 percent in November and December had some positive spin-off for the services sector.
He said a further official interest rate cut in February would provide more support for the services sector in 2012.
“We expect the RBA to cut rates again soon, probably as early as next week’s February RBA board meeting, to help further ‘fireproof’ the local economy from any potential negative fallout from Euroland’s chronic fiscal and debt woes,” he said.