CANBERRA, AAP – Australia’s services sector remained in decline in September, but a leading business group hopes easing coronavirus restrictions will see the industry begin to recover in the coming months.

While the Australian Industry Group performance of services index edged up by 0.1 points to 45.7 in September, it remained below the 50-point mark that separates contraction in the sector from expansion.

“Restrictions associated with the Delta outbreaks in south eastern Australia were the major contributor to the continued contraction of the Australian services sector in September,” Ai Group chief executive Innes Willox said.

“While predictions are highly conditional, we are expecting a mild upturn in October followed by further gains as restrictions are eased in line with higher levels of vaccination.”

Meanwhile, new figures may provide some clues as to how grim the upcoming labour force report for September might be at a time when half the population was in lockdown.

The Australian Bureau of Statistics will release its payroll jobs report for the period to September 11 on Thursday.

In the previous report, payroll jobs tumbled 1.3 per cent in the fortnight to August 28, which followed a 0.4 per cent decline in the previous two weeks.

At the time, economists said if this momentum continued into the early stages of September, it could mean further job losses of up to 200,000 in the next labour force data due on October 14.

In August, 146,300 jobs were lost as a result of COVID-19 lockdowns in NSW, Victoria and the ACT.

Reserve Bank of Australia governor Philip Lowe said this week following his board’s monthly meeting that these restrictions on activity had had a significant effect on the labour market.

Perversely, the unemployment rate fell to a near-13-year low of 4.5 per cent in August, but this was the result of people giving up looking for work.

Dr Lowe has previously warned the jobless rate could reach the “high fives” in the current economic downturn.

The ANZ job advertisement series for September, also released this week, saw a third consecutive monthly fall and points to an unemployment rate above five per cent in coming months.

However, Dr Lowe says the economic contraction forecast for the September quarter is expected to be only temporary, with growth resuming in the final three months of the year.