Consumers are using any spare cash they have on dining while shunning the shops, a survey of the Australian services industry suggests.
The Ai Group’s Performance of Services Index released on Wednesday recorded an expansion in activity in May, reversing four straight months of contraction in the services sector.
“While performance across the sector as a whole lifted, results were mixed across services sub-sectors,” Ai Group chief executive Innes Willox said, noting a strong bounce for hospitality but continuing declines in retail.
The hospitality sector – which includes accommodation, cafes and restaurants – registered an increase of 4.1 points in May to 60.1, a robust lift above the index’s 50-point mark separating expansion and contraction.
“Consumer spending in the hospitality sector has been elevated in recent months as consumers direct their discretionary spending to this sector,” the Ai Group’s summary of the monthly PSI report said.
But shoppers appeared less likely to spend their earnings on other items, with the index suggesting that retail trade activity – which includes online purchases – contracted for the sixth month in a row in May.
“Competition, subdued localised economies and a move away from discretionary spending on goods led to lacklustre results as the sector continued to languish,” the Ai Group said.
“Consumers appear to be directing their spending to sectors other than retail.”
The PSI numbers appeared to back up ABS data published on Tuesday that indicated retail spending across the country dropped by 0.1 per cent in April.
The PSI, compiled from responses of about 200 companies, showed selling prices fell in May for the fifth consecutive month, but that wages for service sector workers rebounded after hitting a record low in April.