V.K.
December 4th, 2010, 01:43 AM
AUSTRALIAN BROADCASTING CORPORATION:
The Australian Industry Group/Commonwealth Bank Performance of Services Index has capped a trifecta of poor domestic economic data this week.
It slipped 4.5 per cent in November to 46.2, below the 50-point level that indicates growth.
October had been the first month of growth in about half a year, and Ai Group chief executive Heather Ridout says the November rate rise appears to have snuffed out the tentative recovery.
"This economy is very patchy. We saw a very anaemic growth performance this week out of the national accounts. We saw a horrible productivity performance and we are seeing patchy activity state by state, sector by sector," she said.
The monthly survey of industries as diverse as tourism and transport, fast food and finance shows all but one service sector shrinking last month - property and business services.
The biggest falls were in retail, recreation, health, accommodation and restaurants.
Ms Ridout says that reflects not only the impact of rising interest rates, but a high Australian dollar.
"Both the dollar and interest rates are wearing down quite hard on the sector and the tourism industry is soft. Retail is showing another soft month and we've seen official figures that are pointing to not much happening there either," she said.
"It is not a very good outlook for Christmas and I think both these issues, high interest rates and the dollar will continue to impact on the sector for months to come."
The latest PSI reading comes after the September quarter growth figures came in at a lower-than-expected 0.2 per cent and after the retail sales figures showed a slump of 1.1 per cent in the month of October.
Jennifer Cromartee from the Australian Retailers Association says her members are pessimistic this festive season.
"Over 60 per cent of the retailers we surveyed are expecting it to actually be lower than last year. That is what they are telling us," she said.
"We are hoping that it is actually going to be that 3.5 per cent increase but it has been a tough year, particularly in fashion and household goods and the department store sector as well."
The recent stream of data has been much weaker than most economists expected just a few weeks ago.
Now economists are revising their interest rate forecasts and anticipating that the RBA will sit on the sidelines for a while.
"My suspicion is until the tide turns and we start to get some significantly stronger data again, yes, the Reserve Bank is on hold right now," BT's chief economist Chris Caton said
http://www.abc.net.au/news/stories/2010/12/03/3083713.htm
The Australian Industry Group/Commonwealth Bank Performance of Services Index has capped a trifecta of poor domestic economic data this week.
It slipped 4.5 per cent in November to 46.2, below the 50-point level that indicates growth.
October had been the first month of growth in about half a year, and Ai Group chief executive Heather Ridout says the November rate rise appears to have snuffed out the tentative recovery.
"This economy is very patchy. We saw a very anaemic growth performance this week out of the national accounts. We saw a horrible productivity performance and we are seeing patchy activity state by state, sector by sector," she said.
The monthly survey of industries as diverse as tourism and transport, fast food and finance shows all but one service sector shrinking last month - property and business services.
The biggest falls were in retail, recreation, health, accommodation and restaurants.
Ms Ridout says that reflects not only the impact of rising interest rates, but a high Australian dollar.
"Both the dollar and interest rates are wearing down quite hard on the sector and the tourism industry is soft. Retail is showing another soft month and we've seen official figures that are pointing to not much happening there either," she said.
"It is not a very good outlook for Christmas and I think both these issues, high interest rates and the dollar will continue to impact on the sector for months to come."
The latest PSI reading comes after the September quarter growth figures came in at a lower-than-expected 0.2 per cent and after the retail sales figures showed a slump of 1.1 per cent in the month of October.
Jennifer Cromartee from the Australian Retailers Association says her members are pessimistic this festive season.
"Over 60 per cent of the retailers we surveyed are expecting it to actually be lower than last year. That is what they are telling us," she said.
"We are hoping that it is actually going to be that 3.5 per cent increase but it has been a tough year, particularly in fashion and household goods and the department store sector as well."
The recent stream of data has been much weaker than most economists expected just a few weeks ago.
Now economists are revising their interest rate forecasts and anticipating that the RBA will sit on the sidelines for a while.
"My suspicion is until the tide turns and we start to get some significantly stronger data again, yes, the Reserve Bank is on hold right now," BT's chief economist Chris Caton said
http://www.abc.net.au/news/stories/2010/12/03/3083713.htm