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Activity in the Australian services sector has had a solid start in 2018, expanding in January for an 11th straight month – the longest run since March 2008.

The Australian Industry Group’s Performance of Services Index (PSI) rose 2.9 points to 54.9 points in January.

Results above 50 points indicate expansion.

“The strength with which the services sector has opened 2018 is another sign that confidence and momentum are building across the domestic economy,” Ai Group chief executive Innes Willox said in a statement on Monday.

But, Mr Willox said, activity varied across sub-sectors during the month, with conditions generally looking better in the business-oriented sub-sectors than in consumer-oriented ones.

Three sub-sectors expanded – property and business services; financial and insurance services; and transport and storage.

Two sub-sectors – hospitality, and personal services – were stable.

While four sub-sectors – wholesale; retail; communications and health; and education and community services – contracted.

The retail sub-sector endured an 11th straight month of flat or contracting activity.

Extreme heat and the Australian Open tennis tournament boosted sales in Melbourne, but aggressive competition from offshore and online retailers generated serious headwinds elsewhere.

Business confidence and orders from business customers improved, boosted in part by a rebound in real estate transactions in some locations.

Demand for labour strengthened amid reports of skill shortages in specialised fields.

However, businesses across all sub-sectors continued to experience higher energy and regulatory costs, which was crimping margins and generating pressure on businesses to lift prices.